CWS Market Review – December 16, 2025

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Circle your calendars for Friday, December 26. That’s when I’ll send you the Buy List portfolio changes for 2026.

As usual, I’ll add five new names to the Buy List, and I’ll delete five current ones. The Buy List stays at 25 stocks. The new Buy List goes into effect on January 2 which will be the first day of trading of the new year.

Once the changes are made, the Buy List is locked and sealed, and I can’t make any changes for the next 12 months. I like to release the portfolio changes a few days early just in case someone claims I’m somehow manipulating the numbers.

Our Buy List has been live on the Internet every hour of every day for the last 20 years. Thanks to everyone who’s been a supporter of high-quality, low-turnover investing.

Now let’s look at our long-delayed jobs report. This morning, the Labor Department finally released the jobs report. The good news is that last month, the U.S. economy gained 64,000 jobs which topped Wall Street’s forecast of a gain of 45,000.

Here’s a look at nonfarm payrolls:

The bad news is that the unemployment rate rose to 4.6% which is the highest in four years. This appears to be more evidence of the “low hire, low fire” jobs market.

The real surprise is that in October, the economy shed 105,000 jobs. For September, there was a surprise increase of 108,000. The broader U-6 rate increased to 8.7% which is the highest since August 2021.

The government shutdown heavily impacted the numbers, and the effect may continue for a few months. During October, the number of government jobs fell by 162,000. During November, it continued to fall by 6,000.

The report also had revisions to previous months. For example, the jobs total for August was revised downward by 22,000 to show a loss of 26,000. For September, the number of jobs was revised lower by 11,000.

Here’s a look at some of the details from the report:

The establishment numbers showed most of the gains in November came from a familiar source — health care added 46,000 jobs, accounting for more than 70% of the total net increase. Construction rose by 28,000, while social assistance contributed 18,000.

On the downside, transportation and warehousing was off 18,000, part of a continuing trend in job losses for the sector. Leisure and hospitality also posted a loss of 12,000.

“The U.S. economy is in a jobs recession,” said Heather Long, chief economist at Navy Federal Credit Union. “The nation has added a mere 100,000 in the past six months. The bulk of those jobs were in healthcare, an industry that is almost always hiring due to America’s aging population.”

If I had to guess, I don’t think today’s release will have much sway over the Federal Reserve. However, the next jobs report, due to come out in early January, could be very important to the Fed.

After lowering interest rates at the last three meetings, the Fed will probably take a rest at the January meeting. Traders currently think there’s only a 24% chance that the Fed will cut rates again next month. After that, traders see two 0.25% cuts coming next year.

The other key input in this equation is average hourly earnings. Last month, average hourly earnings rose by only 0.1%. Frankly, that’s pretty weak. Wall Street had been expecting a gain of 0.3%. Over the last year, average hourly earnings were up by 3.5%. That’s the slowest annual gain in four years. If inflation is a problem, then I doubt it’s coming from the labor market.

According to the data, household employment increased by 407,000 over the last two months. At the same time, the labor force increased by 323,000. The labor force participation rate increased to 62.5%.

We also got the retail sales report. For September, retail sales were flat. Wall Street had been expecting a gain of 0.1%. If we don’t count autos, then retail increased by 0.4%. That beat Wall Street’s estimates of 0.2%.

In other economic news Tuesday, the Commerce Department reported that retail sales were flat in September, against a forecast for a 0.1% increase, according to numbers adjusted for seasonality but not inflation. Excluding autos, however, sales increased 0.4% which doubled Wall Street’s estimate of 0.2%.

Last Wednesday, the Fed voted to cut interest rates and the stock market rallied. The S&P 500 rallied again on Thursday to reach a new all-time high. It was the first time the index closed above 6,900. Since the market’s low in April, the S&P 500 has added nearly 40%.

What’s important to understand is that the nature of the rally has gradually changed. Before, only a small group of stocks were doing the heavy lifting. Now, more stocks are joining in.

For example, since late October, financial stocks have been leading the market. That sector hasn’t done much of anything for the last 15 years. Healthcare stocks have been a train wreck for the last three years, but now they’re showing some strength.

Consumer staples have also edged up some in recent weeks. Industrial stocks have been gaining as well. In fact, the Dow Jones Industrials are outpacing the S&P 500. For the seven years prior to September, the Dow badly lagged the S&P 500.

The stock market has fallen for the last three days in a row. Today the index briefly fell below its 50-day moving average.

What’s happening is that Wall Street has adopted a more conservative outlook. That means that some of the boring sectors are suddenly in favor again. Since late October, the S&P 500 has been basically flat, but the S&P 500 Tech Index has fallen by more than 5%.

This trend is an outcome of lower interest rates from the Fed. As rates drop, investors desire stable stocks with stable dividends.

Last week, Abbott Labs (ABT), one of our Buy List stocks, announced that it’s raising its quarterly dividend from 59 to 63 cents per share. That’s an increase of 6.8%. What makes this notable is that this is the 54th year in a row that Abbott has increased its dividend. There aren’t many stocks with a streak like that. Abbott has been on our Buy List for the last five years.

Too many investors tend to overlook dividends, but they’re a key part of long-term investing success. Since 2020, Abbott has increased its dividend by 70%. The new dividend is payable on February 13 to shareholders of record on January 15.

Abbott is also a good example of the kind of stock that’s been leading the market in recent days (+5% to -1%).

Here’s a 42-year chart of Abbott Labs with its dividends reinvested (black) and without dividends (blue). Those little payments really do add up.

That’s all for now. The CPI report is due out tomorrow. I’ll have more for you in the next issue of CWS Market Review.

– Eddy

Posted by on December 16th, 2025 at 5:54 pm


The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.