Good morning, investors. Equity markets will be open on New Year’s Eve this Wednesday, while bond markets will close early at 2 PM.
Then, everything will be closed on January 1.
But back-to-back shortened trading weeks haven’t discouraged investors from piling into high-growth stocks to end the year.
Confidence game
This is not what a cautious stock market looks like.
The equal-weight consumer staples benchmark has dropped to record lows relative to the equal-weight S&P 500, indicating investors are abandoning one of the most reliable safety trades in search of more risk and higher upside.
The consumer staples sector — which includes household brands like Procter & Gamble, Coca-Cola, and Costco — typically outperforms during periods of uncertainty. These are companies with predictable demand, steady cash flows and minimal earnings volatility.
When the market turns defensive, investors often rush into consumer staples.
The opposite is happening right now.
Despite inflation concerns, a start-and-stop tariff rollout, and shifting Fed expectations, staples have marched lower all year against the broader market.
The comparison illustrated above is equal-weight versus equal-weight, meaning that the average stock in the defense sector has underperformed the average stock in the S&P 500.
In other words, investors are leaning into risk.
“Every sector in the S&P 500 is trading above its 200-day moving average — firmly in uptrends — with one exception: Consumer Staples,” said market analyst JC Parets, founder of TrendLabs.
“And that's exactly what you want to see in a healthy bull market.”
Indeed, capital continues to flow toward companies with operating leverage, earnings momentum and exposure to innovative technology, leaving little left over for defensive positioning.
With the current setup in mind, it seems likely that most investors appear comfortable with the outlook for earnings, the AI trade and Fed interest rates, with any uncertainty out of Washington seen as either manageable or moot.
That’s consistent with a market that believes momentum will continue, and that any weakness in economic data will be short-lived.
It’s also consistent with a robust bull market that remains intact beneath the surface, even if leadership shifts and volatility flares up from time to time.
“All the evidence continues to pile up in the same direction,” said Parets. “This is still a bull market.”
As unpredictable as the market has been in 2025, confidence remains high heading into 2026.
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Market snapshot
Elsewhere
📊Gold and silver prices are fluctuating wildly. After touching record highs, both precious metals reversed and fell on Monday. China, the third-largest silver mining country, is expected to limit exports in January. (Yahoo Finance)
🐂 Every Wall Street analyst is bullish on 2026. Sell-side strategists are lockstep in their optimism, with the average S&P 500 forecast for next year at 9%. Not one of the 21 forecasters tracked by Bloomberg expects a decline. (Bloomberg)
🤝 SoftBank made a $4 billion AI acquisition. It agreed to buy the data center firm DigitalBridge to “strengthen the foundation for next-generation AI data centers,” according to CEO Masayoshi Son. (CNBC)
Rapid-fire
Cathie Wood’s ARK Funds have crushed the S&P 500 this year (Barron’s)
Nvidia has taken a $5 billion stake in Intel, carrying out a transaction announced in September (Reuters)
General Motor’s stock is having its best year since re-emerging from bankruptcy in 2009 (CNBC)
“Big Short” investor Michael Burry predicts a tech market-bubble bursting (WSJ)
Pending home sales surged in November by the most since February 2023 (Yahoo Finance)
President Zelenskyy asked President Trump for 50 years of security guarantees for Ukraine (CNBC)
China’s cybersecurity regulatory wants to crack down on AI chatbots (CNBC)
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On this day
🗓 December 30, 1974: US stocks closed out one of their most painful years in history, with the Dow Jones Industrial Average down 27%, its worst annual drop since 1931.
Last thing
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About me
📰 I’m Phil Rosen, co-founder and editor-in-chief of Opening Bell Daily. I’ve published books, lived on three continents, and won awards for my journalism, which has appeared in Business Insider, Fortune, Yahoo Finance, Bloomberg and Inc. Magazine.
I write our flagship newsletter and host our show, Full Signal, to prepare you for each trading day — unpacking markets, economic data and Wall Street with analysis you won’t find anywhere else.
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