Last week’s GDP publication surprised expectations and helped prompt a multi-day rally that pushed markets to record levels on Christmas Eve. Third quarter GDP printed at 4.3%, ahead of the 3.2% consensus, with notable contributions from consumer spending, exports and government outlays.

Consumer consumption increased 3.5% on an annualized basis. When examining the components of spending, the largest contributors were health care, recreational goods, vehicles and other nondurable goods. Health care was the top contributor, indicating that a substantial share of the spending gain is linked to essential services rather than discretionary purchases. Rising insurance premiums, medical services and prescription costs can elevate spending measures even without greater real consumption, so headline consumer strength can obscure strain on household budgets and limit flexibility for discretionary categories.

Markets will complete the 2025 trading year this week and then open the new year on Friday. Thursday, January 1st, is observed as the New Year’s Holiday. Key scheduled releases to watch through the week include the following items:

• Pending Homes Sales (Tue)
• Chicago Business Barometer (Tue)
• Minutes of Fed’s December FOMC Meeting (Tue)
• Initials Jobless Claims (Wed)

Market participants are focused on whether the S&P 500 can reach 7,000 before year-end, which would correspond to SPY trading at or above 700.00. Last week produced a new SPY high at 691.66, which stands as the immediate resistance level of interest heading into the coming sessions.

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