NEW YORK, Dec. 28, 2025, 1:15 p.m. ET — Market Closed
Wall Street heads into the final full trading week of 2025 with financial services stocks back in the spotlight—helped by a broader rotation away from mega-cap tech and toward more moderately valued corners of the market, even as the S&P 500 hovers within striking distance of the 7,000 milestone. [1]
With U.S. stock exchanges shut for the weekend, investors’ immediate question is less about what’s trading right now and more about what could move the financial sector when the next session begins—especially in a holiday-thinned tape where modest flows can have outsized impact. [2]
Where financial services stocks stand heading into Monday
The Financial Select Sector SPDR Fund (XLF)—a widely used proxy for U.S. financial services stocks—finished Friday, Dec. 26 at $55.62, down 0.20% on the day and just below its 52-week high of $55.89, according to a Charles Schwab ETF report using data as of the Dec. 26 close. [3]
XLF’s top holdings underscore why the “financials” story in 2025 hasn’t been just about banks. The fund’s largest positions include Berkshire Hathaway, JPMorgan Chase, and major payments networks Visa and Mastercard, followed by Bank of America, Wells Fargo, Goldman Sachs, Morgan Stanley, Citigroup, and American Express. [4]
That mix matters for the week ahead: banks tend to trade off interest-rate expectations and the shape of the yield curve, while payments and asset-light finance names can be more sensitive to consumer activity and overall market risk appetite.
The broader market backdrop: quiet finish, big levels in view
The last session (Friday, Dec. 26) was subdued. The S&P 500 closed at 6,929.94, the Dow at 48,710.97, and the Nasdaq Composite at 23,593.10 in a post-holiday, light-volume session that left major indexes near record territory even as the day’s moves were small. [5]
Looking into the coming week, Reuters reported the S&P 500 was about 1% away from 7,000 and on track for an eighth straight monthly gain, a streak that would be its longest since 2017–2018. [6]
Strategists quoted by Reuters framed the setup as still constructive, but vulnerable to headlines and year-end positioning. Paul Nolte, senior wealth adviser and market strategist at Murphy & Sylvest Wealth Management, said momentum remains with the bulls and suggested the market’s path of least resistance is higher absent a shock. [7]
For financial services stocks, that “near-records” backdrop is a double-edged sword: strong equity levels support asset managers, payments, and capital markets activity—yet rich price levels can invite profit-taking if rates, policy expectations, or credit concerns shift.
The key catalyst for financials: Fed minutes and the rate-cut debate
The biggest scheduled market catalyst isn’t earnings—there are no significant corporate earnings on the calendar this week, according to Investopedia. [8]
Instead, the week’s center of gravity is policy expectations:
- Reuters noted the Federal Reserve lowered its benchmark rate by 75 basis points over the last three meetings of 2025 to 3.50%–3.75%. [9]
- The most recent cut (at the Dec. 9–10 meeting) was a divided vote, and officials’ projections for the path ahead varied widely—setting the stage for markets to parse the details. [10]
- The minutes from that December FOMC meeting are due Tuesday, and may shed light on the internal debate about inflation, growth, and how much (or how little) easing is appropriate in 2026. [11]
Michael Reynolds, vice president of investment strategy at Glenmede, told Reuters the minutes could be “illuminating” in understanding the arguments around the table as investors try to handicap the pace of 2026 rate cuts. [12]
Why this matters for financial services stocks:
- Banks: The path of short-term rates affects deposit costs and loan pricing; the yield curve affects net interest margins.
- Insurers: Bond yields influence reinvestment income and portfolio returns.
- Capital markets firms: Policy expectations can move volatility, trading activity, and deal appetite.
- Payments: Less rate-sensitive, but still impacted by growth expectations and market sentiment.
Adding a political overlay, Reuters reported investors are also watching for any signals about President Donald Trump’s coming Fed chair nomination to replace Jerome Powell, whose term ends in May—a development that could sway rate expectations and, by extension, financials. [13]
Rotation into financials: what’s been driving it
One reason financial services stocks have stayed relevant late in the year is sector rotation. Reuters reported that while tech has struggled in recent weeks (down more than 3% since early November even after a rebound), other areas—including financials—have posted solid gains. [14]
Anthony Saglimbene, chief market strategist at Ameriprise Financial, told Reuters the moves suggest rotation into areas where valuations look more moderate, alongside growing confidence that the economy has held up better than many feared. [15]
This framing is particularly important for investors watching financial services stocks into year-end: the sector can benefit when markets broaden out beyond the narrowest set of winners—especially when policy expectations shift from “restrictive” to “easing, but gradual.”
What investors should watch before the next session
Because the market is closed today, the practical question is what to monitor before Monday’s opening and through the holiday-shortened week.
1) Market hours and holiday schedule
The NYSE core trading session runs 9:30 a.m. to 4:00 p.m. ET. [16]
New Year’s Day (Thursday, Jan. 1, 2026) is an exchange holiday (markets closed), per NYSE’s holiday calendar. [17]
2) Rates and Treasury yields
Even in a quiet session, rates can matter: AP reported the 10-year Treasury yield was 4.13% on Friday. [18]
For financial services stocks, a key pre-market check is whether yields are rising or falling—and whether the curve is steepening (often supportive for bank margins) or flattening.
3) The economic calendar that can move financials
Investopedia highlighted the week’s main data releases:
- Monday, Dec. 29: Pending home sales (November) [19]
- Tuesday, Dec. 30: Case-Shiller home price index (October), Chicago Business Barometer (December), and December FOMC meeting minutes [20]
- Wednesday, Dec. 31: Weekly initial jobless claims (week ending Dec. 27) [21]
Housing data can matter for consumer-credit sentiment and mortgage-linked finance names, while labor market prints feed into the Fed’s reaction function.
4) Bond-market early close
SIFMA’s holiday schedule recommends an early close at 2:00 p.m. ET on Wednesday, Dec. 31, 2025 for the U.S. fixed income market, ahead of New Year’s Day. [22]
That can affect liquidity and price action across rates—often a key driver of financials on quiet week(s).
5) Liquidity and year-end positioning risk
Reuters flagged that year-end portfolio adjustments can add volatility, and light holiday volumes can exaggerate moves. [23]
For financial services stocks that have already rallied into late December, that raises the odds of “air pockets” on relatively small sell programs—or sharp squeezes higher if positioning is thin.
The setup for the financial services trade: banks vs. “financials ex-banks”
A useful way to think about the sector right now is to separate it into two engines that don’t always move in sync:
Rate-sensitive financials (banks and lenders)
These names tend to respond first to any repricing of the Fed path after Tuesday’s minutes. If markets interpret the minutes as more cautious about cutting, long yields might rise and the curve could reprice—good for some bank-margin narratives, but potentially negative for overall equity multiples. If the minutes read dovish, it can support risk assets broadly, though banks may face questions about longer-term net interest income as policy eases.
Market-sensitive financials (payments, exchanges, asset managers, brokers)
These are more tied to market levels, deal/tape activity, and confidence. With the S&P 500 near major psychological levels and year-end rebalancing underway, flows matter. XLF’s large exposure to Visa and Mastercard is one reason broad “financials” can hold up even if bank stocks pause. [24]
Bottom line for Monday and the week ahead
Financial services stocks head into Monday with three forces colliding:
- A market near record levels and major milestones. [25]
- A pivotal policy narrative focused on how many 2026 cuts are coming—and what the Fed was debating internally. [26]
- Holiday-thinned liquidity, when small flows can move prices more than usual. [27]
For investors watching financial services stocks specifically, the “tell” is likely to be rates: if Treasury yields and the yield curve move meaningfully on Tuesday after the Fed minutes, banks and insurers may lead the sector’s next leg. If policy expectations stay stable and the broader market continues to grind higher, payments-heavy financial exposure (as reflected in XLF’s top holdings) could remain a steadier driver. [28]
References
1. www.reuters.com, 2. www.reuters.com, 3. www.schwab.wallst.com, 4. www.schwab.wallst.com, 5. apnews.com, 6. www.reuters.com, 7. www.reuters.com, 8. www.investopedia.com, 9. www.reuters.com, 10. www.reuters.com, 11. www.reuters.com, 12. www.reuters.com, 13. www.reuters.com, 14. www.reuters.com, 15. www.reuters.com, 16. www.nyse.com, 17. www.nyse.com, 18. apnews.com, 19. www.investopedia.com, 20. www.investopedia.com, 21. www.investopedia.com, 22. www.sifma.org, 23. www.reuters.com, 24. www.schwab.wallst.com, 25. www.reuters.com, 26. www.reuters.com, 27. www.reuters.com, 28. www.schwab.wallst.com