December 8, 2025

The S&P 500 ended November essentially flat, but not before enduring considerable volatility, including a mid-month pullback that approached -5%. Investors expressed concern over AI stock valuations and whether they are sustainable, putting pressure on major tech companies like Nvidia. However, the index quickly recovered, driven by strong corporate earnings, expectation of a Fed rate cut, and strong consumer spending from Black Friday. Looking ahead, the S&P is poised for another year of double digit returns with a “Santa Rally” expected, potentially producing three consecutive years of 20%+ gains. This feat has only happened once before, during the Dot-Com era, which of course ended with a crash in 2000. The AI trade is very reminiscent of the Dot-Com market, but timing the fall will be impossible. We must maintain a disciplined approach of buying the dips when valuations become attractive, staying diversified, and keeping a long-term perspective by remembering the marketing will always emerge higher.  

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