To The Moon

Markets Near Highs as 2026 Begins

U.S. stocks enter the first full week of 2026 just off record highs, closing out the Santa Claus rally period with a steady, if unspectacular, performance.

• Dow Jones led last week, rising 0.66%

• $S&P 500(.SPX)$ gained 0.2%

• Nasdaq finished roughly flat, as weakness in some “Magnificent 7” stocks was offset by strength in semiconductors

Investors are beginning to shift their focus from year-end momentum to what the 2026 landscape may hold, amid lighter holiday trading volumes.

A Big Week for Jobs and the Fed Outlook

After months of disrupted data caused by the government shutdown, economic releases are finally back on schedule, and the spotlight is firmly on the labor market.

Key expectations:

• December nonfarm payrolls: +55,000 (down from November’s +64,000)

• Unemployment rate: expected to edge down to 4.5%

• Additional insight from ADP payrolls, job cuts data, and jobless claims

Markets will closely watch whether labor-market cooling strengthens the case for future Fed rate cuts. For now, traders see an 85% chance the Fed holds rates steady at its January meeting.

Adding another layer of uncertainty: Trump is expected to announce his nominee to replace Fed Chair Jerome Powell in early January, ahead of Powell’s term ending in May.

Replace Fed Chair

2025 in Review: A Year of Resilience and Innovation

Despite sharp volatility, including an April selloff tied to tariff concerns, 2025 delivered strong gains:

• S&P 500: +16%

• Nasdaq: +20%+

Technology once again dominated returns, led by:

• $NVIDIA(NVDA)$ (+30%)

• $Alphabet(GOOG)$ (+60%)

A Concentrated Rally, and a Key Question for 2026

Still, cracks are visible beneath the surface:

• Market gains in 2025 were highly concentrated

• The equal-weighted S&P 500 lagged for the third year in a row

• Tech accounted for roughly 90% of post-tariff rebound gains

The big question for 2026: Can the AI- and tech-driven rally broaden, or will leadership continue to narrow? $Palantir Technologies Inc.(PLTR)$ $Broadcom(AVGO)$ $Oracle(ORCL)$

What to Watch This Week

• Friday’s jobs report (the marquee event)

• ISM manufacturing and services data

• Consumer sentiment readings

• A light but growing earnings slate, ahead of big banks kicking off earnings season later this month

Conclusion: Optimism, With Eyes Wide Open

Markets enter 2026 supported by strong momentum, cooling inflation, and transformative innovation, especially in AI and technology. But elevated valuations, labor-market uncertainty, and political and policy shifts mean selectivity will matter more than ever…

[Salute]

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This summary is for informational purposes only and does not constitute financial advice. Investors should conduct their own research before making investment decisions.

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