Weekly Market Recap: December 20, 2025 – Tech Rebounds, Small Caps Hold Strong Into Year End

Welcome to LegacyHaven Advisors’ weekly market update, the last full trading week of 2025. We help pre-retirees and retirees secure lifelong income, protect their wealth, and thrive in any economy. Markets closed modestly mixed amid holiday-thinned volume and triple witching OPEX volatility. The S&P 500 was relatively flat up 0.1%, Nasdaq +0.5%, Dow –0.7%, while the Russell 2000 continued its relative strength with small-cap outperformance. Tech staged a late-week comeback, erasing early AI fears and setting up potential Santa Claus rally momentum.

Early Dips, Late Surge

• Monday: AI stocks dragged indices lower on valuation concerns

• Mid-week: Cooler inflation data calmed nerves

• Thursday/Friday: Strong tech rebound + triple witching volume (~24.6B shares) pushed Nasdaq and S&P into the green

The Russell 2000 held firm, continuing the rotation theme we’ve tracked all month, while growth names reclaimed leadership into year-end.

Key Takeaway: Markets dipped, but buyers stepped in again. The late-week tech surge shows the AI narrative isn’t dead, it just needed to take a breath.

Fears Fade, Rebound Takes Over

Early week pressure on AI names Nvidia, Oracle, Avago sparked the usual “bubble” chatter. By Thursday, cooler inflation data and strong buying flipped the script, tech stocks led the charge, lifting Nasdaq +0.5% weekly. This push-pull is classic late-bubble behavior with quick rotations and sharp rebounds.

Inflation Cools, Rate Outlook Steady

Mid week inflation reads came in softer than expected, reinforcing the Fed’s path. No new surprises, we were calling for a cooling inflation number in our recent posts. Going forward we see a cooler then expected CPI report again next month. Markets now fully focused on year end positioning, tax loss harvesting, and the possibility of a Santa Claus rally. YTD gains remain positive with the S&P 500 up 16%, Nasdaq up 20%, and the Russell up 13%.

Holiday Rally Setup, But Volatility Lingers

Thin holiday trading ahead, expect low volume and potential whipsaws. Tech’s resurgence + small-cap strength + favorable inflation = constructive backdrop into 2026. We still see the Russell as the catch-up trade heading into the new year. Beyond small caps, consumer discretionary stocks are poised to benefit from the projected falling inflation over the next quarter. Also, we can't forget about about precious metals. Silver, platinum, palladium, coper, gold, are all poised to continue appreciating. Wait for a buying opportunity first.

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

2025 delivered strong gains, but volatility reminded us bubbles expand and contract quickly. Sitting close to all time highs now, it's hard to believe that back in April nearly everyone on Wall Street was calling for a recession. Now what if you were relying on your investment account to provide income payments during that crash? You may have had to of sold equities at an inopportune time just to watch them rebound and retrace higher months later. A rebound in the market feels great, until the next dip coincides with required withdrawals. Sequence-of-returns risk doesn’t care about your YTD average, it punishes bad timing. That’s why the most prepared clients we work with:

• Let growth assets (tech, small caps) compound

• Secure essentials with guaranteed income to avoid forced withdrawals from the market

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Take the Next Step

• Run your own numbers- 30 seconds, real rates

• Stress-test a drawdown with our Sequence of Returns Calculator

• Book a Discovery Call

End the year strong!