What Investors Need to Know Now

The Dow Jones Industrial Average (DIA) scraped out a win post-Christmas, extending a resilient streak, while the S&P 500 (SPY) and Nasdaq Composite (NASDAQ:QQQ) slipped just under 0.1%. Investors are still buying dips, with stocks like Dollar Tree bouncing back after recent sell-offs. But here’s the twist: while equities held their ground, bond markets sent a loud warning. The 10-year Treasury yield flirted with multimonth highs at 4.63%, a clear nod to inflation and deficit concerns that just won’t quit. Globally, Japan’s Nikkei 225 gained over 1%, thanks to automakers like Toyota (NYSE:TM), while Turkey turned heads with its first rate cut in two yearsa bold move in its battle against inflation.

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Meanwhile, U.S. equity funds are riding high, pulling in a solid $20.56 billion in net inflows last week, fueled by optimism over inflation cooling and whispers of potential rate cuts in 2025. Investors threw their weight behind large-cap stocks, adding a hefty $31.67 billionthe most since Octoberwhile small- and mid-cap funds saw cash flow out. The “Santa Claus Rally” is doing its thing, but not every corner of the market is cheering. Healthcare and consumer discretionary funds bled cash, showing that not all sectors are riding the wave.

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Bitcoin’s (BTC-USD) rally cooled but stayed strong, hovering below $96,000 after a Christmas Day spike. Over in commodities, gold stayed steady at nearly $2,626 an ounce, and oil prices nudged higherjust enough to show some cautious optimism. As the year wraps, markets are holding firm despite inflation pressures, deficit fears, and geopolitical noise. The real test for investors? How to position for 2025 as central banks, led by the Fed, face mounting pressure to thread the needle between growth and inflation.

This article first appeared on GuruFocus.