The latest market outlook highlights a broad rally of roughly 5% from recent lows, helped by a quiet stretch surrounding Thanksgiving and supported by strong performance from major indexes now pressing against resistance levels and prior highs. December has historically been a constructive month for equities, posting positive returns nearly 80% of the time since 1950. While leading stocks continue to show strength, underperformers face pressure from tax-loss selling. The Federal Reserve is expected to cut rates again by 0.25%, with the federal funds rate potentially trending toward 3% or lower in 2026. However, elevated valuations—particularly within tech and AI-related sectors—suggest that future gains may rely more on broadening market participation from consumer, financial, and healthcare segments rather than expanding overall market multiples.

Economic and policy developments also shape the near-term landscape. The newly enacted One Big Beautiful Bill Act is projected to add 1%–2% to GDP in 2025, with tax refunds poised to favor smaller retailers and support capital spending. Healthcare remains an area to watch heading into major January industry conferences, where deal activity typically picks up. Although the Buffett Indicator sits at historically elevated levels, adjustments for improved corporate profitability show the market trading below year-2000 extremes. While equities remain expensive overall, many companies may experience cyclical improvement heading into 2026 as operating margins expand and interest rates fall—positioning financials, select cyclical sectors, and diversified growth areas for potential upside.

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