Stock Market Outlook December 2025, Five Key Charts Showing Where the Stock Market Goes Next
- The S&P 500 and Dow erased early November losses with a strong Thanksgiving week rally while small caps surged 5.5%.
- Investors are splitting into "Team Google" and "Team OpenAI" as Gemini 3 and TPU chips challenge Nvidia's dominance.
- Market breadth is improving with over 54% of stocks above their 200-day average and foreign inflows hitting a record $646.8 billion.
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| Photo by Jakub Żerdzicki on Unsplash |
The stock market just survived a brutal test and looks ready to rally into year end. November has historically been a reliable month for gains but this year traders had to fight for every inch. The month started with the worst five day opening stretch since 2008 as high valuations and fears of a Federal Reserve pause spooked investors. But a late surge in the final week has flipped the script. The S&P 500 and Dow Jones Industrial Average erased their earlier losses to finish strong while the small cap Russell 2000 soared 5.5% in just one week.
Here are the five key charts and trends signaling where the market might go next.
1. The Great AI Divide: Team Google vs. Team OpenAI
The release of Google's Gemini 3 model has fundamentally altered the artificial intelligence trade. Investors are no longer buying "AI" as a monolith. They are picking sides. On one hand you have "Team Google" featuring Alphabet and Broadcom whose stock rose 1.36% thanks to its role in designing the TPU chips powering Gemini. On the other side is "Team OpenAI" which includes industry heavyweights like Microsoft and Nvidia.
The market is waking up to the fact that Google's TPUs offer a viable alternative to Nvidia's expensive hardware. Nvidia shares fell 1.81% recently as fears mounted that their stranglehold on the chip market is loosening. Interestingly the S&P 500 managed to rise 0.9% on a day when Nvidia slumped more than 2.5%. This decoupling suggests the broader market can now thrive even if the former AI kingpin takes a breather.
2. The Fed Pivot is Back on the Table
Interest rates remain the gravity of the financial world. Earlier in the month traders were convinced the Fed would skip a rate cut in December. That fear has evaporated. Comments from Fed Governor Christopher Waller and rumors of Kevin Hassett as the next Fed chair have revived hopes for relief.
Market data from CME Group shows expectations for a December cut have rebounded sharply. Investors are betting the central bank will prioritize protecting the labor market over fighting sticky inflation. This renewed optimism is a major pillar supporting the current rally.
3. Market Breadth is Finally Improving
For months the bull market was fragile because it relied on just a handful of massive tech stocks. That is starting to change. In late October less than 48% of S&P 500 stocks were trading above their 200 day moving average. That figure has now climbed back above 54%.
This metric is critical because broad participation is the hallmark of a healthy and sustainable rally. Sectors like healthcare and small caps are joining the party which gives the overall market a much sturdier foundation heading into 2026.
4. Insiders Are Buying the Dip
Corporate executives are often the smartest money in the room. In October the ratio of insider selling to buying hit a record high of 27 which signaled massive cashing out. That alarming trend has reversed dramatically. The ratio has plummeted to 2.5 as of late November.
While a low ratio isn't a perfect crystal ball the drop indicates that insiders have stopped dumping shares and started accumulating them again. Executives typically only buy their own stock for one reason. They believe the price is going higher.
5. Foreign Investors Can’t Quit Wall Street
Fears of a "Sell America" trade triggered by tariff tensions earlier this year have proven to be completely unfounded. Foreign capital is actually flooding into U.S. markets at a record pace. Treasury Department data shows foreign investors poured a staggering $646.8 billion into U.S. stocks in the 12 months ending in September.
This massive inflow contradicts the narrative that global investors are abandoning the dollar or U.S. assets. Instead they remain aggressive buyers which provides a deep reservoir of demand that supports stock prices.