With a lack of clear catalysts during the final few trading sessions of the year, the stock market struggled to build momentum on Tuesday. The dollar maintained its decline, while the onshore yuan broke through the 7 mark. Silver and gold stabilized after a significant pullback from their recent record highs.
As of the time of writing, Dow Jones futures were down 0.06%, S&P 500 futures dipped 0.07%, and Nasdaq futures fell 0.10%.
Stock market indicators in Europe and Asia showed minor fluctuations. Tuesday marked the final trading day of the year for several markets, including those in Germany, Japan, and South Korea.
The Europe Stoxx 600 index has climbed 16% this year, consistently reaching new all-time highs and even outperforming the S&P 500 in U.S. dollar terms. The banking sector led the gains, surging 65% year-to-date and on track for its best annual performance since 1997, fueled by robust earnings and generous shareholder returns.
S&P 500 futures were largely flat, following two consecutive days of declines for the U.S. benchmark index.
Global stocks are poised to end the year on an optimistic note, set for a third consecutive year of gains despite recent subdued trading. The MSCI All-Country World Index has risen approximately 21% in 2025 and is heading for its strongest annual performance since 2019.
Mohit Mirpuri, Senior Partner at Singapore's SGMC Capital, commented, "This pullback appears more like a healthy consolidation rather than a shift in the underlying trend."
Historical patterns give investors reason for optimism as they enter the new year. Data compiled by Bloomberg shows that the index has averaged a 1.4% gain in January over the past decade, rising in six of those ten years.
Market attention is now turning to the release of the Federal Reserve's December meeting minutes. During that meeting, the Fed implemented its third consecutive interest rate cut and maintained its guidance for just one additional cut in 2026.
Some analysts suggest that the Fed's December rate cut, and the accompanying minutes, could further solidify market expectations for continued monetary easing. Traders are currently pricing in two more rate cuts for 2026.
In the foreign exchange market, thin liquidity due to year-end holidays has traders broadly expecting continued pressure on the U.S. dollar. The dollar is on track for its worst annual performance since 2017, having declined nearly 10% this year.
The U.S. Dollar Index, which measures the greenback against a basket of major currencies, was last at 98.03, hovering near a three-month low touched last week. The index is projected to fall 9.6% this year, its largest annual drop in eight years. Contributing factors include market bets on Fed rate cuts, narrowing interest rate differentials with other economies, and concerns over the U.S. fiscal deficit and political uncertainty.
Strategists at MUFG anticipate the Dollar Index could fall another 5% next year, noting that U.S. economic performance and monetary policy direction will remain key drivers.
However, some argue that the dollar has shown signs of stabilization in recent months, and the scope for the Fed to implement significantly deeper rate cuts may be limited.
Guy Miller, Chief Market Strategist at Zurich Insurance Group, stated, "We believe the dollar is likely to trade in a range around current levels against major crosses. It has been largely range-bound since the summer, particularly against the Swiss franc and the euro."
U.S. President Donald Trump mentioned he has a preferred candidate in mind for the next Fed Chair but is in no rush to make an announcement; he also referenced the possibility of dismissing current Fed Chair Jerome Powell.
Investors are also assessing the U.S. interest rate and monetary policy outlook. Most Wall Street interest rate strategists, with few exceptions, generally expect U.S. Treasury yields to remain stable or even move higher in 2026, even if the Fed cuts rates.
In other markets, Bitcoin experienced heightened volatility, giving up gains after briefly surpassing $90,000 in the previous session. Indicators related to the Dollar Index edged lower. Oil prices held onto gains as traders weighed geopolitical tensions in Venezuela, Russia, and Iran against concerns about oversupply.
Goldman Sachs highlighted a trio of tailwinds—fading headwinds from tariffs and inflation, tax cuts, and interest rate cuts—driving growth.
In a recent research report, Goldman Sachs indicated that the strong growth resilience of the U.S. economy in 2025 is expected to continue into 2026. As the tax cut details from the Trump administration's "Big and Beautiful" bill combine with more favorable, looser financial conditions, and headwinds from tariffs and inflation significantly ease, the dominant macroeconomic narrative of a U.S. "soft landing" is expected to gain considerable traction in 2026—meaning U.S. economic growth is projected to be faster than market expectations.
Goldman Sachs economists emphasized that despite recent stagnation in the softening non-farm payroll market, factors such as the vigorous progress in AI data center construction, over $100 billion in tax rebates, a substantial reduction in the drag from tariffs, and the Fed's rate cut path will collectively boost economic growth momentum.
Bank of America's CEO issued a warning, stating that the market has become overly obsessed and that the excessive focus on the Fed is misplaced.
Bank of America CEO Brian Moynihan pointed out that the U.S. economy is far larger than the Federal Reserve and should not command such a disproportionate share of public attention.
When asked about Trump's impending nomination of a new Fed Chair to replace Powell and what it means for consumers, he said, "The obsession with the Fed is way too high." He added, "The idea that our destiny is tied to the Fed moving 25 basis points, in my mind, is just out of whack."
However, when pressed on concerns about potential political interference facing the Fed under a new chair, he responded, "The markets will punish if we lose an independent Fed."
Focus Stocks Mining stocks rose broadly in premarket trading. Harmony Gold gained 3.76%, Gold Fields advanced 3.72%, Pan American Silver rose 3.02%, Hecla Mining climbed 2.81%, First Majestic Silver Corporation increased 2.75%, Coeur Mining was up 2.68%, Silvercorp Metals added 2.42%, Newmont Corporation rose 2.24%, Kinross Gold gained 2.02%, Eldorado Gold advanced 1.82%, and Gold.com edged up 1.80%.
Tesla shares rose over 1% premarket, driven by market expectations of an imminent Optimums contract award.
Applied Digital surged over 30% premarket after announcing plans to spin off its cloud business and merge it with EKSO to form a new entity.
Faraday Future gained 1.8% premarket, officially announcing it will host a shareholder day event during next year's CES exhibition.
Popular U.S.-listed Chinese stocks moved higher premarket. Baidu jumped over 5%, Vipshop gained over 2%, while Taiwan Semiconductor Manufacturing Company and Alibaba each rose 0.3%.
XPeng Motors advanced over 2% premarket as the new XPeng P7+ is set for a global launch across 36 countries.
NetEase shares climbed nearly 2% premarket after Citigroup reiterated NetEase as one of its top picks in the gaming sector.
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