S&P 500 Win Streak Puts Index Inches From All-Time High Amid Fed Cut Expectations

This analysis is based on a December 7, 2025 Seeking Alpha report highlighting the S&P 500’s near-record position amid a win streak [1]. As of December 5, 2025, the SPDR S&P 500 ETF (SPY) traded at ~$685.7, implying an S&P 500 index level of ~6857—within ~38 points of its October 28 all-time high (~6895) [0, 2]. The index has maintained a bullish “golden cross” since July 1, with its 50-day moving average above the 200-day moving average [1].

Short-term momentum is fueled by market expectations of a 25 basis point Fed rate cut at the December 10 meeting (87% probability per futures markets) and tame inflation data (core PCE price index at 2.8% YoY in September) [2]. These factors have benefited growth sectors, particularly technology and consumer discretionary. Over the medium to long term, the S&P 500’s performance remains heavily concentrated in the “Magnificent Seven” tech mega-caps (Nvidia, Apple, Microsoft, Amazon, Alphabet, Meta, Tesla), which have driven ~175% returns since the October 2022 bull market start—far outpacing the 58% gain of the equal-weight S&P 500 [3]. This concentration is supported by real AI-driven earnings growth but creates structural market risks.

Key performance metrics include 16% YTD gains, 12.8% 12-month gains, and a forward P/E ratio of ~25x for the index (elevated relative to the 10-year average of 18.6x) [2]. Consensus forecasts project 12.8% S&P 500 EPS growth in 2026 [2].

1. Extended Golden Cross Signal
   : The S&P 500’s 50-day MA has remained above the 200-day MA since July 1, indicating sustained bullish market momentum [1].
2. Tech Concentration Dilemma
   : While the “Magnificent Seven” have driven strong index returns through AI earnings, their overrepresentation (e.g., ~34.9% of SPY is in Information Technology) amplifies both upside potential and downside risk from AI sentiment shifts [2, 3].
3. Bifurcated Market Sentiment
   : SPY has seen $3-4 billion in 5-day net inflows, reflecting positive investor sentiment, yet hedge funds have trimmed positions, indicating caution at the margin [2].

• Fed Policy Uncertainty
  : Surprise inflation or growth data could alter rate cut expectations, pressuring elevated valuations [2].
• Concentration Risk
  : A downturn in the tech mega-cap sector could trigger significant index volatility [3].
• Earnings Disappointment
  : 2026 EPS forecasts (12.8% growth) are lofty; any shortfall could lead to market devaluation [2].
• Election Volatility
  : Historical data shows an average ~22% S&P 500 correction around midterm election years [3].

• Continued AI-driven earnings growth from tech leaders could sustain upward momentum.
• Fed rate cuts, if implemented, could further boost growth sectors and potentially push the index to a new record.

The S&P 500’s near-record position reflects a confluence of short-term tailwinds (Fed cut bets, tame inflation) and long-term structural dynamics (AI growth, tech concentration). Market participants should monitor Fed policy decisions, earnings reports from large tech firms, and the evolving concentration of the index to contextualize future performance.

This analysis is based on data from internal sources [0] and external reports [1-3], with information gaps including exact December 6 price action and the precise duration of the full win streak.