Both the S&P 500 ETF (SPY) and the Nasdaq 100 ETF (QQQ) closed lower on Monday as the final trading week of 2025 kicked off.
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Over the weekend, President Trump met with Ukrainian President Volodymyr Zelenskyy at the Mar-a-Lago resort. Both leaders said progress was made in ending the Russia-Ukraine war, although Trump noted that key issues still remain, such as control over territory. “I do think we’re getting a lot closer, maybe very close,” Trump said.
After the meeting, Trump spoke with Russian President Vladimir Putin over the phone. Putin accused Ukraine of using drones to attack one of his residences, adding that the attack would have consequences for peace negotiations. Zelenskyy denied the validity of the attack and accused Putin of using it to “justify additional attacks against Ukraine.”
As the end of 2025 approaches, the S&P 500 (SPX) is on track for its worst year of underperformance compared to other global stocks since 2009. The MSCI All Country World ex-US Index has returned about 28.9% this year, well above the S&P 500’s return of 17.7%. “Many of the investors I talk to are examining their geographical allocations in light of the big-picture events of the past year,” said Niamh Brodie-Machura, co-CIO of equities at Fidelity International.
Asian countries, like China, South Korea, and Japan, have greatly contributed to the outperformance of international stocks and benefited from the AI boom as investors diversified away from the U.S.
At the same time, the S&P 500 is still trading near all-time highs and faces a positive catalyst in the form of a “three-headed monster,” according to Bespoke Investment Group co-founder Paul Hickey. Hickey explained that the intimidating name refers to when the U.S. dollar, oil, and the 10-year Treasury yield are trading near their respective 52-week lows.
“When all those are rising in unison, it’s usually a big headwind for the market,” said Hickey on CNBC’s “Squawk Box.” “When they’re all falling or near 52-week lows, like they are now, it’s like they’re rolling out the red carpet for equities.”
Looking ahead, the Fed will release the minutes from the December 9-10 Federal Open Market Committee (FOMC) meeting on Tuesday and provide investors with additional clues on the rate path outlook.
The S&P 500 (SPX) closed with a 0.35% loss, while the Nasdaq 100 (NDX) fell by 0.46%.
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