Navigating Market Turmoil in December 2025 – How Stock Trends Guides Investors

Macro environment heading into the last month of 2025

The final month of 2025 arrives on the heels of a volatile autumn. A 43-day U.S. government shutdown disrupted economic statistics and introduced a K-shaped slowdown: labour demand softened, tariffs drove up costs and consumer spending became more polarised. In the United States, the EY-Parthenon research team expects real GDP growth around 2 % for 2025 but notes that tariffs and tighter immigration may drag growth to 1.9 % in 2026. AI-related capital expenditure accounted for roughly one-third of U.S. GDP growth in the first half of 2025 while non-technology investment has stalled. The Federal Reserve cut rates in October to 3.75 %–4.00 % and is expected to pause at its December meeting; EY forecasts the next rate cut in January 2026 with about 50 basis points of easing over 2026. This implies a brief window of stable monetary policy during December.

Canadian data paint a similarly cautious picture. RBC Economics notes that employment growth will likely be flat in November and the unemployment rate should hold around 6.9 %, roughly a percentage point above a “normal” level. The Bank of Canada’s October rate cut moved policy into the neutral range, and RBC does not expect further cuts unless growth or inflation surprises materially. Meanwhile, third-quarter Canadian GDP grew 2.6 % (annualised) largely because of a rebound in net trade; domestic demand softened, but government spending and past rate cuts are helping stabilise activity.

Commodity markets may also influence December performance. The International Energy Agency (IEA) expects global oil supply to rise by about 3.1 million barrels per day in 2025, producing a surplus that could reach more than 4 million bpd in 2026. Supply growth is exceeding demand even after upward demand revisions, suggesting pressure on oil prices and energy equities. Conversely, metals such as silver, lithium and copper remain closely tied to the energy transition and AI-related demand.

Investor psychology has shifted markedly. The AI rally is showing cracks; valuations remain lofty and the Buffett Indicator has climbed above 200 per cent, signalling that the U.S. stock market is strongly overvalued relative to GDP. Several high-flying AI stocks have pulled back and investors are questioning when AI investment will translate into profits. At the same time, sentiment surveys show only average bullishness, implying that a full-blown bubble may not have formed. Overall, December faces multiple macro catalysts: consumer spending reports after Black Friday, the 9–10 December Federal Reserve meeting, the 16 December non-farm payroll report, the 18 December consumer price index release and the year-end “Santa Claus rally”. Investors should expect heightened volatility and thinning liquidity.

How the Stock Trends ST-IM model sees December 2025

Stock Trends’ ST-IM Select Stocks report lists stocks with a probability that the stock will outperform over multiple time horizons (4wk/13wk/40wk). For the week of 28 November 2025, 341 securities across all exchanges qualified. The important measure for our December outlook is the model’s mean four-week return (x4wk). The table below shows the top ten ST-IM selections ranked by expected four-week return. These names cluster in consumer, materials, technology, media and healthcare. Each has a positive long-term trend (), indicating price strength, except for HELE-Q ().

(The “x4wk” values represent the model’s estimated percentage change over the next four weeks.)

Observations and macro linkages:

• Silver and specialty chemicals: The top pick is ProShares Ultra Silver 2× Shares (AGQ), a leveraged ETF tracking silver. The model projects a roughly six-per-cent four-week gain with a 64.9-per-cent probability of outperforming over 13 weeks. Precious-metal demand benefits from AI servers and renewable energy, but the IEA’s forecast of rising oil supply implies broader commodity weakness. Investors should treat leveraged commodity ETFs cautiously in volatile markets.
• Communication-software and semiconductor equipment: Crexendo Inc. (CXDO) and Trio-Tech International (TRT) sit in the technology sector. Stock Trends expects gains of roughly five and three per cent respectively. With AI valuations under scrutiny, selective exposure to smaller communication and semiconductor names may offer more reasonable risk-reward than mega-cap AI leaders.
• Defensive consumer staples: Helen of Troy (HELE) and Vita Coco (COCO) exemplify consumer-staples names projecting mid-single-digit gains. High-income consumers continue to spend while lower-income households feel pressure, supporting demand for branded household and beverage products. Defensive sectors may also fare better amid policy uncertainty.
• Biotechnology and specialty pharmaceuticals: Six of the top ten picks – Ironwood Pharmaceuticals (IRWD), REGENXBIO (RGNX), Savara (SVRA), Erasca (ERAS), Dyne Therapeutics (DYN) and Tactile Systems (TCMD) – are biotechnology or medical-device firms. Healthcare is the largest sector within ST-IM selections, with an average expected four-week return of about 1.46 per cent across 99 names. The sector benefits from innovation tailwinds and tends to be less sensitive to Fed policy and tariffs; however, individual names often hinge on clinical catalysts.
• Media and digital advertising: iHeartMedia (IHRT) appears with an expected return of about 3.4 per cent. Advertising spending is closely tied to consumer sentiment. A divergence between high- and low-income consumers means advertising-driven firms could benefit if holiday spending surprises on the upside.

Sector patterns

Across all ST-IM selections, the highest average expected four-week returns occur in consumer staples (about 1.88 %), materials (1.48 %), technology (1.47 %), media (1.46 %) and healthcare (1.46 %). The energy sector sits near the bottom with an average expected return of roughly 1.21 per cent, consistent with forecasts of oil oversupply. This sector breakdown suggests that, for December, the Stock Trends model favours defensives and innovation-linked stocks rather than cyclical energy or heavy industry.

December opportunities

The dataset also includes Stock Trends’ broader x4wk predictions for nearly 7,900 securities, irrespective of their ST-IM ranking. These estimates – the average of x4wk1 and x4wk2 – form the basis of other Stock Trends trading models. They identify more aggressive opportunities across the short-term one-month time horizon. The table below lists the top ten such securities.

Symbol	Company	Sector	Mean 4-wk return	Trend indicator
STIM	Neuronetics Inc.	Healthcare	16.03 %
SATL	Satellogic Inc.	Satellites/Space (Industrials/Technology)	16.03 %
PYXS	Pyxis Oncology Inc.	Healthcare	10.60 %
BCAB	BioAtla Inc.	Healthcare	9.44 %
IMDX	Insight Molecular Diagnostics Inc.	Healthcare	9.02 %
LABD	Direxion Daily S&P Biotech Bear 3× Shares	Biotechnology ETF	8.37 %
LABU	Direxion Daily S&P Biotech Bull 3× Shares	Biotechnology ETF	7.86 %
DCM	Data Communications Management Corp.	Industrials	7.53 %
JFIN	Jiayin Group Inc.	Finance	7.40 %
THRY	Thryv Holdings Inc.	Media	7.31 %

Key takeaways:

• Unusually high forecasts concentrate in micro-cap biotechnology and leveraged ETFs. The top predicted four-week returns – about 16 per cent for Neuronetics (STIM) and Satellogic (SATL) – are associated with stocks whose recent price action is downtrend (). Many high-ranking names are small biotechnology firms (Pyxis Oncology, BioAtla, Insight Molecular Diagnostics) or leveraged ETFs (LABU, LABD, BITU, MUU) that amplify volatility. Without ST-IM’s probability filter these opportunities carry high risk; they may perform well if macro surprises (e.g., strong risk appetite after the Fed meeting) but could decline sharply during December’s event risk.
• Healthcare and consumer discretionary dominate the broader model. When looking at all x4wk predictions, healthcare leads with an average forecasted return of roughly 0.8 per cent, followed by consumer discretionary and industrials. This mirrors ST-IM’s emphasis on healthcare and highlights potential resilience in consumer-focused names provided spending remains solid.
• Energy lags. Energy stocks sit near the bottom of the broad dataset’s rankings, consistent with expectations of oil oversupply and tariff-related trade frictions. Investors should be cautious of energy companies despite occasional high forecasts.

Positioning for December: applying the Stock Trends framework to macro themes

The Stock Trends framework combines quantitative momentum signals (trend symbols like , , etc.), statistical forecasts of future returns (x4wk) and fundamental considerations. December’s macro backdrop underscores the importance of risk management and selectivity:

1. Expect volatility around key dates. Macro catalysts are clustered in a few trading sessions. Adhere to position sizing rules and consider scaling in and out before the 9–10 December Federal Reserve meeting and the mid-December data releases. Light holiday liquidity and tax-loss harvesting may exaggerate price moves.
2. Lean toward defensive growth and innovation, but avoid the AI bubble. Stock Trends picks show strength in consumer staples and healthcare – sectors that weather economic slowdowns. At the same time, many technology names outside the ST-IM list are exposed to an AI rally that may be overheating. Investors should favour smaller, profitable tech and semiconductor firms over highly valued megacaps; semiconductors may still benefit from AI infrastructure spending, but valuations and supply constraints warrant caution.
3. Use ST-IM probabilities to triage opportunities. The probability metric (prob13wk) provides a measure of conviction. In December’s uncertain environment, focus on names with high probabilities and solid sector support, even if their expected returns are moderate. High-octane TOT picks lacking a probability filter should only be considered by aggressive traders with tight risk controls.
4. Watch Canadian and U.S. labour data for domestic exposure. Canadian stocks in the list (such as Taseko Mines and Trio-Tech) will react to domestic data. Flat employment and a neutral policy stance in Canada, along with U.S. labour and inflation data, will influence consumption-driven companies and policy expectations.
5. Monitor commodity-linked names. Materials stocks such as Alto Ingredients, Sociedad Química y Minera (SQM), Taseko Mines and AGQ (silver ETF) feature prominently among ST-IM selections. Demand for lithium and copper remains underpinned by electric-vehicle and renewable energy trends, but oversupply in oil and potential slowdown in global trade could spill over into broader commodity markets. Investors should differentiate between metals tied to long-term energy transition themes and cyclical energy producers.

Conclusion

December 2025 is set to be event-driven, volatile and polarised. Tariff-related inflation and a slowing labour market have pushed central banks to the sidelines, leaving investors to navigate a landscape where AI enthusiasm faces valuation headwinds and energy markets grapple with oversupply. The Stock Trends framework helps cut through this uncertainty by pairing return forecasts with trend signals and probability filters. For the final month of the year, it favours defensively oriented consumer staples, innovation-driven healthcare and materials tied to the energy transition. Investors should use the ST-IM probability metric to prioritise higher-conviction names, remain wary of leveraged ETFs and speculative micro-caps highlighted by other models, and stay mindful of macro catalysts that could swing sentiment abruptly. By marrying quantitative signals with macro awareness, the Stock Trends framework can help investors navigate December’s cross-currents and position for the new year.