Dec. 26 is historically the market’s strongest trading day, according to Bespoke Investment Group. U.S. stocks rallied into the Christmas holiday on Wednesday, with the S&P 500 hitting a new intraday record during the shortened Christmas Eve session. For investors, however, the real holiday gift from Wall Street often comes after Christmas. Bespoke Investment Group data show that Dec. 26 has been the most reliably positive session of the year for the S&P 500. Since 1953, when markets were open the day after Christmas, the index has declined only six times over 39 years — and never by more than 0.5%. When trading takes place on Dec. 26, the S&P 500 also records its strongest average gain of the year at 0.5%, along with the highest median gain at 0.4%. “Seasonal trends should never be the sole basis for bullish or bearish positioning, but this is an unusually consistent pattern,” Bespoke said in commentary shared with MarketWatch. Friday’s session marks the second day of the Santa Claus rally, the seven-day stretch covering the final five trading days of one year and the first two of the next. The rally carries extra importance this year after delivering negative returns in each of the past two years. According to Dow Jones Market Data, Santa has never skipped three years in a row. Stocks were broadly higher Wednesday, with the S&P 500 up 0.3%, the Nasdaq edging 0.2% higher, and the Dow Jones Industrial Average leading with a 0.6% gain.

Concerns that central banks will eventually print money to erode the real value of government debt remain the primary force behind gold surge, while geopolitical tensions are reinforcing its safe-haven appeal. Gold’s move to a new record high signals the return of the so-called “great debasement trade,” according to Robin Brooks, senior economist at the Brookings Institution and former chief currency strategist at Goldman Sachs. His remarks came as bullion climbed above $4,400 an ounce. In a Substack post, Brooks said the rally reflects the Federal Reserve’s recent rate cut and growing fears of debt monetization — the risk that central banks will absorb government bond issuance. Gold is now up 68% in 2025, while silver, driven by many of the same dynamics, has surged 140% after also setting a fresh high this week. Geopolitical risks have added further momentum. Escalating tensions in Venezuela and Ukrainian attacks on Russian ports and shipping have heightened gold’s appeal as a store of value. Brooks traces the breakout in precious metals to Chair Jerome Powell’s dovish Jackson Hole speech on Aug. 22 and the Fed’s 25-basis-point rate cut on Dec. 10. Markets are now pricing in further easing by the central bank. He argues that the debasement trade is spreading beyond precious metals. Currencies with relatively low debt burdens, including the Swedish krona and the Swiss franc, are increasingly moving in line with gold and silver. A comparison of G10 currencies against the dollar shows rising correlations with precious metals. The krona’s strength, Brooks notes, is particularly striking given its history as a volatile currency rather than a traditional safe haven. He also cautions that the dollar’s apparent stability is misleading, as its strength against the weak Japanese yen masks broader softness against a wider basket of currencies. Jeroen Blokland, economist and manager of the Blokland Smart Multi-Asset Fund, highlights the ongoing Japanese yen carry trade as another pillar supporting gold. Investors continue to fund positions in higher-risk assets by borrowing yen, with precious metals among the favored destinations. Blokland wrote on X that last week’s Bank of Japan rate hike — taking policy rates to 0.75%, the highest since 1995 — has failed to unwind the carry trade. Inflation is likely to remain structurally elevated, while the interest-rate gap between Japan and the U.S. remains wide enough to sustain yen-funded trades. Japanese 10-year government bond yields have continued to climb and have nearly doubled this year, reaching around 2.08%.

Nomura: A more critical take on AI winners is healthy Investors looking for a year-end rally to fresh record highs have had to temper their expectations. Since the start of December, the S&P 500 has moved sideways in a tight range, hovering just below new highs. Part of the drag on sentiment comes from recent stumbles in some of the market’s biggest winners. Heavyweights such as Nvidia, Microsoft and Broadcom have lost momentum, while smaller-cap former favorites — including CoreWeave, along with energy- and quantum-related stocks — have also struggled. That weakness has fueled concerns that the pullback in momentum stocks could signal a broader shift in market sentiment, particularly toward AI plays, with negative implications for 2026. But Charlie McElligott, Nomura’s cross-asset strategist, says this pattern is typical for this time of year — and argues the AI trade is far from over. McElligott says the AI investment story has entered a more turbulent phase, as markets move beyond early capital-expenditure excitement and toward a more disciplined evaluation of fundamentals. Investors are now paying closer attention to balance sheets, return on investment, margin pressure and energy constraints — a development he views as constructive. Still, McElligott believes much of the recent selling reflects routine profit-taking after a strong run, made messier by the high levels of leverage tied to momentum trades. Historically, December has been a difficult month for momentum strategies. Since 1995, the momentum factor has averaged a 1.1% pullback during the month, and it is the worst median month for one-year momentum over the past 30 years. Since 2016, the median decline has been closer to 2.7%, as investors rotate ahead of the “January effect” and into prior laggards. In effect, investors are using last year’s winners as a funding source to broaden exposure to stocks expected to benefit from stronger economic conditions in 2026. Importantly, McElligott says recent selling does not suggest investors are abandoning AI-linked stocks. Options market activity during the latest equity selloff shows traders selling downside protection on AI proxies such as Broadcom, Eaton, Alphabet, Nvidia and Vistra — a sign the market does not expect much further downside and may be approaching an inflection point.

The AI trade is showing signs of strain as investors grow increasingly uneasy about the heavy debt loads companies such as Oracle and CoreWeave are taking on to fund massive data-center expansions. Concerns over whether these firms can continue financing AI infrastructure have rattled the sector in recent weeks, with selling pressure intensifying on Wednesday following renewed worries tied to Oracle. Broadcom shares sank 4.5% on the day, extending their decline to more than 21% over the past five sessions — the stock’s worst five-day stretch since late March 2020, according to Dow Jones Market Data. Other semiconductor names also moved lower. Nvidia, Advanced Micro Devices and Micron Technology all fell, with Micron slipping ahead of its fiscal first-quarter earnings report after the close. The PHLX Semiconductor Index dropped for a fifth straight session and is now down more than 10% over that period. “The growing concern about whether neoclouds like Oracle and CoreWeave can finance their data-center buildouts is weighing on the entire AI sector,” D.A. Davidson analyst Gil Luria said. If these companies are unable to raise additional debt, their spending on chips would likely stall, he added. Oracle shares slid more than 5% after a report suggested talks with alternative-asset manager Blue Owl Capital for a $10 billion data-center project had stalled. The Financial Times reported that the proposed 1-gigawatt Michigan data center, intended to support OpenAI, had hit a snag. Oracle disputed the report, saying it is working with Related Digital and that final equity negotiations are proceeding as planned. Mizuho analyst Jordan Klein echoed that funding concerns around Oracle are pressuring AI stocks, noting that thin year-end trading volumes are amplifying market moves. CoreWeave shares also dropped sharply, falling more than 7% after criticism from prominent short seller Jim Chanos and reports of data-center delays. Speaking on the Monetary Matters podcast, Chanos described neocloud providers like CoreWeave as operating a “commodity business,” arguing that they capture little of the long-term value generated by AI workloads. He also warned that the rapid depreciation of AI chips poses a major risk, particularly for companies relying heavily on debt to acquire Nvidia hardware. Adding to the pressure, The Wall Street Journal reported that CoreWeave is facing months-long delays at a Texas data-center cluster intended for OpenAI. Still, not all analysts are bearish. Futurum CEO Daniel Newman said he sees “little to no evidence of a slowdown in the AI buildout.” While debt financing concerns represent “the biggest market overhang right now,” he believes investor fears are overstating the risk of a collapse in AI demand. “The selloff is more of a speed bump as investors digest capital spending, leverage and buildout risk,” Newman said. “The fundamentals remain intact, and AI demand is still insatiable.”