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U.S. Stocks Post Strong 2025 Rally as Rare Market Signal Emerges and 2026 Risks Loom

Powell's "fairly highly valued" warning heightens concern over pricey equities.

Overview

  • The Dow, S&P 500, and Nasdaq rose roughly 13%, 16%, and 21% for the year through Dec. 3, with multiple new highs led by growth and AI shares.
  • Coverage highlights a newly observed market signal described as previously seen only once, presented as a historical clue rather than a forecast.
  • Analysts flag three potential 2026 crash catalysts: stretched valuations, a possible unwind in hyped technologies such as AI, and potential dissent at the Federal Reserve.
  • Investor optimism about a lower-rate backdrop continues to support growth stocks, with market tools showing high odds of another Fed cut at the next meeting.
  • Reports emphasize that pullbacks are a normal part of market cycles and have historically created long-term buying opportunities.