Optimists and Pessimists Get Fuel as Santa Claus Rally Expectations Loom - Stay Warm and Encouraged

December 21, 2025

NEW CPI DATA: The U.S. Bureau of Labor Statistics employees were furloughed during October, but we finally got an updated CPI number. These numbers were encouraging, but due to the anomalies with data collection due to the government shutdown, we probably need to see confirmation in the next couple of months. The November Consumer Price Index rose 0.2% for the two months ending in November. The twelve-month number came in at 2.7%, which was much lower than the consensus expectation (3.1%). The "core" CPI, which strips out energy and food, was up 2.6% year over year, the lowest rate since 2021. Rents, a big driver in inflation over the past several years, rose at an annualized rate of 1.6% over the past three months. Airline prices dropped 6.6% over the past two months.

CHOPPY: Investors seemed to tread carefully in drawing too many conclusions with all last week's economic data, which provided mixed signals. There was enough data available for optimists and pessimists to hang their hats on. The S&P 500 swung back and forth and ended the week almost where it began. The NASDAQ Composite was up more, and small company stocks were down a bit.

LONGER-TERM PERFORMANCE: Below are the annualized three-year and five-year numbers for these same indices.

OCTOBER AND NOVEMBER JOBS NUMBERS: Last week, the Bureau of Labor Statistics released employment reports for October and November. November saw a slight surprise to the upside of 64,000 net new jobs (consensus expectation was 50,000). However, the October report was also released, and it showed a drop of 105,000 (see first graph below). For October, there were 162,000 reported government jobs shed as "deferred resignations" were finalized and counted in October. Private sector payrolls rose 52,000 in October and 69,000 in November. The unemployment rate rose from 4.4% in September to 4.6%, the highest rate in four years (see second graph below). During these two months, 323,000 more people entered the workforce, increasing the Labor Force Participation Rate slightly (went from 62.4% to 62.5%). For "Black or African Americans", the unemployment rate has jumped to 8.3%, the highest rate in four years. That is a data point to watch as poor results in this category can sometimes lead a broader trend. The Labor Force Participation Rate for that segment has jumped from 62.4% earlier in the year to 63.9% now. Thus, the unemployment rate has jumped by nearly two percent (6.4% to 8.3%), but there are about half a million more Black and African Americans employed now than one year ago. Government immigration policy is also affecting jobs numbers in that there are 942,000 less foreign born laborers in the U.S. workforce than at the beginning of the year, according to the Federal Reserve Bank of St. Louis. Average hourly earnings rose only 0.1%, and are up 3.5% from a year ago.

FINANCIALS BEATING TECH: We are seeing many investors take some money off the Tech bandwagon and move it into other sectors. As an example, a fund that focuses on financial services companies, Davis Select Financial ETF (DFNL) is up 10.8% since October 29, compared to a negative -0.81% for the S&P 500 during that time span.

EXISTING HOME SALES: Sales of existing homes in November rose by half of a percent from the prior month but were down 1% from November of a year ago. The inventory of available existing homes for sale in November was up by 7.5% compared to November of last year.

U.S. RETAIL SALES STAYED THE SAME IN OCTOBER: According to the U.S.. Census Bureau, from September to October, retail sales did not change. Sales in October were 3.5% higher than one year ago.

BRRR!: Last weekend, my wife and I went to the Philadelphia Eagles game along with a bunch of family members. Being a native New Englander, I like to pride myself in being able to handle the cold, but this was a test as it was brutally cold. The fans were jolly because it seemed to be the return of the Eagles from last year, even though it was not a tough opponent.

THAT TIME OF YEAR!: For those of you in the midst of celebrating Hanukkah, I wish you a Happy and blessed Hanukkah. For those of you, like me, celebrating the Advent Season, and ultimately Christmas this coming week, Merry Christmas! I hope this time of year, which for everyone seems to be a time of slowing, and reflection, introspection and refreshing, I hope and pray this is an especially meaningful time for you, full of new epiphanies and encouragement for the future.

Have a great week!

Our purpose is to honor God by helping our clients see the objective, find the path, and navigate past the obstacles to a more prosperous future.

Douglas R. MacGray, J.D., C.F.P. ®

President

Stonecrop Wealth Advisors, LLC

Direct | Cell | Fax

(610) 628 4545

dmacgray@stonecropadvisors.com

"Everybody talks about wanting to change things and help and fix, but ultimately all you can do is fix yourself. And that's a lot. Because if you can fix yourself, it has a ripple effect." Rob Reiner

"Do not plot harm against your neighbor who lives trustfully near you; ... Do not envy a violent man or choose any of his ways." Proverbs 3:29,31 (NIV)

SOURCES:

OCTOBER AND NOVEMBER JOBS NUMBERS: https://www.bls.gov/news.release/empsit.nr0.htm and https://www.ftportfolios.com/Commentary/EconomicResearch/2025/12/16/nonfarm-payrolls-increased-64,000-in-november AND https://www.wsj.com/economy/jobs/jobs-report-october-november-2025-unemployment-economy-7f6eea90?mod=economy_feat5_jobs_pos3 AND

NEW CPI DATA: https://www.bls.gov/news.release/cpi.nr0.htm AND https://fred.stlouisfed.org/series/LNU02073395 https://www.ftportfolios.com/Commentary/EconomicResearch/2025/12/18/the-consumer-price-index-cpi-rose-0.2percent-over-the-two-months-ending-in-november

FINANCIALS BEATING TECH: YCharts.com

EXISTING HOME SALES: https://www.nar.realtor/newsroom/nar-existing-home-sales-report-shows-0-5-increase-in-november

U.S. RETAIL SALES STAYED THE SAME IN OCTOBER: https://www.census.gov/retail/sales.html

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Investment advisory services offered through Stonecrop Wealth Advisors, LLC, a Registered Investment Advisor with the U.S. Securities and Exchange Commission.

SDG

*S&P 500: This is a measure of the performance of the 500 largest companies in the United States, and it a common index to track the performance of U.S. equity markets, especially the large cap markets.

*MSCI All Country World Index X US: This is a broad measure of the performance of worldwide equity markets excluding the United States.

*Bloomberg U.S. Aggregate: This is a measure of the U.S. bond markets.