Nasdaq and S&P500: US Indices Dip Today While Fed Minutes Reveal Deep Split

Indices Close Lower in Thin Holiday Trading as Year-End Approaches

The major U.S. stock indices finished lower on Tuesday in another low-volume session. The benchmark S&P 500 Index settled at 6896.24, down 9.50 or -0.14%. The tech-weighted Nasdaq Composite closed at 23419.08, down 55.27 or -0.24% and the blue chip Dow Jones Industrial Average ended the session at 48367.06, down 94.87 or -0.20%.

Strong Earnings Carry Markets Through Tariffs, Shutdown, and Geopolitical Chaos

Despite a year where investors faced tariff fears, an historical government shutdown, and relentless geopolitical pressures, all three benchmarks are in a position to post solid double-digit gains.

Simply stated, it was earnings that supported the market and drove the bullish theme throughout the turmoil. Ryan Detrick, chief market strategist at Carson Group in Omaha, summed it up this way, “And in 2025, strong earnings have justified the bull market that we’ve seen this year.”

Wall Street Split on 2026 Outlook: Bulls See More Gains, Bears Urge Caution

Looking ahead to 2026, we’re likely to see more of the same with pockets of volatility overtaken by solid earnings. “We see no major cracks to suggest a recession is coming,” Detrick added. “We’re optimistic the labor market will get better and this bull market will probably have another few tricks up its sleeve in 2026.”

But there are doubters also. Stifel’s Barry Bannister is a little less optimistic and more cautious heading in 2026. He worries investors could be too optimistic, saying a fourth year of gains could be harder to come by. “What we’d be looking at is a range bound market,” he told CNBC’s “The Exchange” on Tuesday. “There’s a lot of optimism going into next year, and we’re just a little more cautious.’

Evercore’s ISI’s Julian Emanuel also pressed the caution button, saying he’s ‘uneasy’ about the lack of bearish calls for 2026. His company forecasts an almost 12% gain in the S&P 500, but he was surprised that there was not one single strategist making a bearish call for 2026. He cites three major catalysts supporting his outlook: artificial intelligence, economic stimulus and earnings growth.

Fed Minutes Reveal Deep Division Over Rate Cuts and Inflation Concerns

In other news, shortly before the close on Tuesday at 19:00 GMT, the Federal Reserve released the minutes from its highly divisive meeting on December 9-10. At that time, members voted to lower interest rates by 25 basis points to 3.5%-3.75%. However, the final vote was very close.

The Federal Open Market Committee (FOMC) approved the cut 9 to 3, with the vote featuring the most dissents since 2019. Officials debated over the need to support the labor market against concerns over inflation.

The minutes stated, “Most participants judged that further downward adjustments to the target range for the federal funds rate would likely be appropriate if inflation declined over time as expected. With respect to the extent and timing of additional adjustments to the target range for the federal funds rate, some participant suggested that, under their economic outlooks, it would likely be appropriate to keep the target range unchanged for some time after a lowering of the range at this meeting.”

All-Time Highs Raise Stakes as Tech Sector Faces Reduced Role in 2026

Although I don’t often put a lot of weight on the end of the year price action, this year since the markets are at all time highs, I do feel a bit of caution as we approach the new year. With less-emphasis expected to be on technology shares, other sectors are going to have to do the heavy lifting in 2026.

More Information in our Economic Calendar.