Weekly Market Recap: December 13, 2025

Rotation Accelerates, Small Caps Shine Post-Cut

Welcome to LegacyHaven Advisors’ weekly market update, where we guide pre-retirees and retirees toward a retirement that thrives in any economy. This week major indices showed mixed results with the Dow Jones up 1.1%, S&P 500 down 0.6%, Nasdaq –1.6%, and Russell 2000 outpacing with a 1.2% gain on the week. The Fed delivered its expected 25 bps cut this week, sparking record highs Thursday, only for AI fears to trigger a Friday selloff. We continue to see a rotation out of tech and into value, cyclicals, and small caps.

Fed Sparks Rally, AI Fears Erase Gains

• Mid-week surge: Dow, S&P, and Russell hit all time record highs post-cut

• Friday reversal: Broadcom, Oracle, Nvidia and the Magnificent 7 led broad declines

• Small caps stole the show: Russell +1.2% weekly hitting all time record highs after a 3 year bear market in small caps

As we’ve mentioned since the summer, rate cuts were coming, even though fear headlines would have you think otherwise. Did you take a position in small caps when we highlighted the fuel that rates cuts would add to the Russel 2000 index?

Key Takeaway: The rotation out of tech stocks does not mark the end of the AI trade, it signals consolidation that will offer buying opportunities. While tech stocks take a breath, other opportunities are present, a few being small caps, cyclicals, precious metals.

Fed Decision Offered a Third Cut, But Hawkish Tilt Ahead

The FOMC lowered rates to 3.50%–3.75%, but signaled fewer cuts in 2026 due to persistent inflation. The Fed also delivered balance sheet expansion (QE), keeping the liquidity spigot open. Despite the fear around less cuts in 2026, it's important to keep in mind that Powell's term ends on May 15th, and a new Fed chair will be appointed. Even though that person is unknown, there is great speculation that the new Fed chair will be Kevin Hasset. Hasset has been on the side of rate cuts, especially cuts of 50 basis points plus. We see that rate cuts may be pause in Q1 of 2026, but will be followed by more aggressive cuts in Q2-Q3 of 2026.

Commodities Spotlight: Silver Hits All-Time Highs

Silver surged to $61–$64+ this week, new records driven by industrial demand (solar, EVs, AI infrastructure), supply tightness, and rate-cut tailwinds. Gold pulled back modestly but held elevated. The breadth has continued to expand beyond silver and gold into precious metals like palladium, uranium, copper, steel, and platinum. Did you diversify into these precious metals when mentioned their upside in our July post? Silver is up 57%, Gold+ 26%, Palladium +18%, Uranium +11%, Platinum +23%, Steel +14% since our post in July.

Bubble Volatility Is Normal, Small Caps Still Have Legs

As we've been saying, the market is in a bubble, and more air was added to the bubble in the form of lowered rates and balance sheet expansion. Ups and downs are to be expected, but the party isn't over yet. Fundamentals remain supportive with earnings accelerating, QT ended, now balance sheet expansion, and lowered rates forcing more money into the markets.

What’s Next? Holiday liquidity thins out, expect chop. But small caps and value still look like the catch-up trade into 2026.

Why This Matters If You’re 5–10 Years From Retirement

Market upside is great for the growth bucket, but the volatility associated with the upside is unpredictable for income withdrawals. A correction like we saw last month forced many retirees to sell stock at an inopurtune time just for income, and as a result missed out on the recovery this month.

That’s why we help our clients:

• Secure Income: So they can be confident no matter how the market is performing.

• Protect Wealth: So that they never run out of money in retirement.

• Thrive in Any Economy: By forecasting economic conditions and positioning accordingly.

If you haven't yet, check out our sequence of returns calculator to see how various market conditions can impact your retirement. For those curious about what guaranteed income rates are currently available, give our annuity income calculator a go to see what's possible.

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