Market Insights Dec 22, 2025
Observations & Insights – December 22, 2025
Meandering Markets
The major U.S. stock indexes slipped over the first half of the week but rebounded sharply Thursday and Friday. For the week, the NASDAQ and S&P 500 finished fractionally higher while the Dow ended slightly down. The S&P 500 and the Dow both remained about -1% below their record levels set on December 11th.
Key Points
• Markets climbed sharply Thursday & Friday after better inflation numbers were reported.
• Labor market numbers were mixed, but unemployment is trending higher.
• Low oil prices may act as an economic tailwind.
• GDP numbers are expected to show the economy is growing at a high rate.
Observations: Soft Data, Japan Hikes Rates, GDP On Deck…
A delayed U.S. labor market report delivered mixed monthly results on jobs growth and the highest unemployment rate since 2021. The economy generated 64,000 jobs in November after a decline of 105,000 the previous month, the third negative result in the past six months. Unemployment rose more than expected to 4.6%.
U.S. stock indexes climbed on Thursday after a report showed weaker-than-expected inflation, potentially giving the U.S. Federal Reserve more room to consider further rate cuts in 2026. The Consumer Price Index rose at a 2.7% annualized rate in November, below economists’ consensus forecast for a 3.1% figure.
Precious metals prices continued to rise, with silver surpassing $67 per ounce for the first time ever and gold eclipsing a record set two months earlier. With less than two weeks left in 2025, silver was up more than 130% year to date based on Friday’s prices, and gold was up 64%.
Oil traded just under $60 a barrel, down slightly for the week. The commodity is down -19% in 2025. Investors should not overlook the softness in crude oil prices. While some may interpret declining energy costs as a warning sign for economic momentum, the opposite outcome is also plausible and, historically, common. Lower oil prices can ease transportation costs and reduce input expenses across a wide range of industries, acting much like a tax cut for the broader economy.
Japan’s central bank responded to inflationary pressures by raising its benchmark interest rate to the highest level in three decades while the European Central Bank kept its key rate unchanged. In lifting its rate by a quarter percentage point to 0.75%, the Bank of Japan on Friday also signaled that more rate hikes could be ahead if the economy continues to meet its growth expectations.
Earnings for companies in the S&P 500 are projected to post double-digit growth for the second year in a row. With about a month to go before fourth-quarter results are released, FactSet reported that analysts expect full-year 2025 earnings to grow by an average of 12.1% over 2024’s results. Energy is the only sector that’s forecast to post an earnings decline.
Stock buybacks by U.S. companies rebounded in the third quarter after slipping in the previous quarter amid heightened uncertainty over issues such as tariffs. Share repurchases by companies in the S&P 500 totaled $249 billion in the July to September period, up more than 6% from the second quarter’s figure, according to S&P Dow Jones Indices.
The government on Tuesday plans to provide its delayed initial estimate of the U.S. economy’s third-quarter growth. The GDP report is being released more than a month and a half later than usual due to the recent government shutdown. After contracting in the first quarter, GDP rose at an annualized rate of 3.8% in this year’s second quarter.
Insights: Greedy Innkeeper or Generous Capitalist?
We have published a version of this insight from our friends at First Trust during the holiday season for years. The parable is as pertinent now as it was 2000 years ago.
The Bible story of the virgin birth is at the center of much of the holiday cheer for many at this time of year. The book of Luke in the Christian Bible tells us that Mary and Joseph traveled to Bethlehem because Caesar Augustus decreed a census should be taken. Mary gave birth after arriving in Bethlehem and placed baby Jesus in a manger because there was "no room at the inn."
Some people think Mary and Joseph were mistreated by a greedy innkeeper, who only cared about profits and decided the couple was not "worth" his normal accommodations. This version of the story (narrative) has been repeated many times in plays, skits, and sermons. It fits an anti-capitalist mentality that paints business owners as greedy, or even evil.
It persists even though the Bible records no complaints and there was apparently no charge for the stable. It may be the stable was the only place available. Bethlehem was overcrowded with people forced to return to their ancestral home for a census, ordered by the Romans, for the purpose of levying taxes. If there was a problem, it was due to unintended consequences of government policy. In this narrative, the government caused the problem.
The innkeeper was generous to a fault, a hero even. He was over-booked, but he charitably offered his stable, a facility he built with unknowing foresight. The innkeeper was willing and able to offer this facility even as government officials, who ordered and administered the census, slept in their own beds with little care for the well-being of those who had to travel regardless of their difficult life circumstances.
If you must find "evil" in either of these narratives, remember that evil is ultimately perpetrated by individuals, not the institutions in which they operate. And this is why it is important to favor economic and political systems that limit the use and abuse of power over others. In the story of baby Jesus, a government law that requires innkeepers to always have extra rooms, or to take in anyone who asks, would "fix" the problem.
But these laws would also have unintended consequences. Fewer investors would back hotels because the cost of the regulations would reduce returns on investment. A hotel big enough to handle the rare census would be way too big in normal times. Even a bed and breakfast would face the potential of being sued. There would be fewer hotel rooms, prices would rise, and innkeepers would once again be called greedy. And if history is our guide, government would chastise them for price-gouging and then try to regulate prices.
This does not mean free markets are perfect or create utopia; they are not and they do not. But businesses cannot force you to buy a service or product. You have a choice – even if it is not exactly what you want. And good businesspeople try to make you happy in creative and industrious ways.
Government does not always care. In fact, if you happen to live in North Korea or Cuba and are not happy about the way things are going, you cannot leave. And just in case you try, armed guards will help you think things through.
This is why the Framers of the US Constitution made sure there were "checks and balances" in our system of government. These checks and balances do not always lead to good outcomes; we can think of many times when some wanted to ignore these safeguards. But, over time, the checks and balances help prevent the kinds of despotism we have seen develop elsewhere.
Neither free market capitalism, nor the checks and balances of the Constitution are the equivalent of having a true Savior. But they should give us all hope that the future will be brighter than many seem to think.
We at Asbury Wealth Partners wish you and your families a Merry Christmas, a Happy Chanukah and a prosperous New Year filled with joy and good health! If you are a client, we thank you for your business and your confidence. If you are not yet a client, we encourage you to contact us in the New Year and explore how our team may be able to add value to your unique financial situation.
These views are those of the author, not of the broker-dealer or its affiliates. This material contains an assessment of the market and economic environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. All investments involve risk, including loss of principal. Forward-looking statements are subject to certain risks and uncertainties. Actual results, performance, or achievements may differ materially from those expressed or implied. Information is based on data gathered from what we believe are reliable sources.
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Portions of this newsletter were prepared by First Trust.
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