December 2025 Paramount Associates Wealth Management Newsletter: Market Update, Fed Outlook, and Portfolio Strategy

December 2025 Market Commentary

By the Wealth Advisors at Paramount Associates Wealth Management

This December 2025 market update from Paramount Associates Wealth Management of Greenwood Village provides insight into recent market activity, Federal Reserve expectations, earnings trends, inflation dynamics, and what these developments mean for long-term portfolio management. As wealth advisors serving Greenwood Village and the South Metro Denver area, our focus remains on translating market data into disciplined investment strategy and thoughtful financial planning.

What Happened in the Markets Last Week

The past week was quiet on the surface but meaningful underneath. The S&P 500 advanced modestly, rising approximately 0.3%, while internal market leadership revealed important signals for investors focused on long-term portfolio construction. Technology and Energy stocks led performance, each gaining roughly 1.4%, reflecting continued demand for innovation-driven growth and infrastructure-related investment themes.

At the same time, traditionally defensive sectors declined. Utilities fell sharply, Health Care moved lower, and Consumer Staples also retreated. This divergence suggests that investors are not positioning for an immediate economic contraction, but rather favoring sectors tied to earnings growth, productivity, and capital investment. For clients of Paramount Associates Wealth Management in Greenwood Village, this type of sector rotation reinforces the importance of diversification rather than short-term market timing.

Inflation data was uneventful in a constructive way. The Personal Consumption Expenditures report, delayed from September, arrived in line with expectations. In the current market environment, stability in inflation readings is viewed positively. Combined with softer private-sector employment data, market expectations for a December Federal Reserve rate cut increased significantly, reinforcing cautious optimism across financial markets.

Sector Performance and Market Leadership

Recent sector performance highlights a key theme we monitor closely in portfolio management: leadership matters more than headlines. Technology and Energy continue to attract capital as investors focus on artificial intelligence, automation, cloud infrastructure, and global energy demand. Meanwhile, weakness in defensive sectors indicates reduced near-term fear around recession.

For investors working with a Greenwood Village wealth management firm, understanding these internal market dynamics is critical. Broad index movements alone rarely tell the full story; sector leadership provides insight into how institutional capital is positioning for the future.

The Federal Reserve and the Path Forward

This week’s focus turns squarely to the Federal Reserve. While markets broadly expect a rate cut, the more important question is how policymakers frame the outlook for 2026. Investors are listening carefully for signals on the pace of future rate adjustments. A tone that appears overly aggressive could raise recession concerns, while excessive caution could reignite inflation fears.

For long-term financial planning and retirement strategy in South Metro Denver, this reinforces why portfolios should not rely on a single interest-rate scenario. At Paramount Associates Wealth Management, we emphasize portfolio resilience across multiple economic outcomes rather than reactive positioning.

Earnings Trends and the Long-Term Outlook

As third-quarter earnings season winds down, attention increasingly shifts to longer-term earnings expectations. Analysts currently project record earnings for the S&P 500 in 2026. Even allowing for historical forecasting optimism, expectations remain well above prior peaks.

Importantly, earnings are stabilizing rather than deteriorating. Companies tied to artificial intelligence, cloud computing, semiconductors, and automation continue to generate stronger earnings growth than the broader market. For portfolio management clients in Greenwood Village and surrounding communities, this supports maintaining exposure to innovation-driven sectors within a disciplined risk framework.

Artificial Intelligence and Global Investment Strategy

Discussion around artificial intelligence often includes concerns about valuation and speculative excess. However, a key distinction today is that large technology firms are delivering real earnings growth. That earnings foundation differentiates current AI investment from prior speculative cycles.

Globally, Europe is approaching AI adoption with a focus on governance, efficiency, and return on investment rather than speed alone. Software development, telecommunications infrastructure, and media production are all evolving as AI becomes embedded into operational processes. Institutional investors worldwide continue to express confidence in AI-related investment themes through at least 2026.

Jobs, Inflation, and Economic Conditions

The employment picture remains mixed. Government data shows modest payroll growth, while private-sector reports highlight layoffs in certain industries. The spending power of middle-income households remains a key driver of economic momentum, even though wage growth may begin to moderate as labor conditions soften.

Structural inflation pressures remain in place due to labor shortages, housing supply constraints, energy infrastructure limitations, and elevated federal deficits. As a result, inflation may remain higher for longer, even if price increases stay controlled. This environment underscores the value of quality assets, diversification, real asset exposure, and thoughtful fixed-income positioning within long-term investment strategies.

Portfolio Strategy Perspective from Greenwood Village Wealth Advisors

For clients of Paramount Associates Wealth Management of Greenwood Village, this environment calls for discipline rather than prediction. Market leadership, earnings stability, and monetary policy uncertainty all point to the importance of diversified portfolio management, risk-aware allocation, and alignment with long-term financial goals.

As wealth advisors serving Greenwood Village, Centennial, Castle Pines, and the broader South Metro Denver area, our role is to help clients navigate these conditions with clarity, perspective, and a focus on sustainable outcomes rather than short-term market noise.

— Scott Tremlett, CEO and Chief Investment Officer