Early Christmas Gift: Gas Prices Below $3

Dec 2, 2025

Christmas has come early for the American consumer as the national average for a gallon of gasoline according to AAA fell fractionally below $3 yesterday for the first time since May 2021. As shown below, gas prices have been muted this year with far smaller swings than has been the case for most of the past few years (more on this below). Over the past year, prices have remained in the low $3 range with the the highest price attained being $3.27 in early April.  It’s now at $2.99/gallon.

The usual seasonal pattern for gas prices – which has been historically consistent with a ramp higher in the first half of the year followed by declines in the second half – has been less pronounced this year. Prices traded flat through September and have been trending lower since.

Prior to this week’s fresh low below $3/gallon, there had only been a 25.7 cent difference between the past year’s high and low price, which is the smallest high/low spread on record for the AAA series dating back to 2005.

At current levels, prices are down 5 cents versus one year ago. 2025 is now the third year in a row with a lower price of gas year-over-year as of December 1st, although we saw prices in the low to mid-$2 range in the second half of the 2010s.

While the narrative for much of 2025 has been “uncertainty” for the consumer, gas prices have been extremely stable and are now back in the $2s as we enter the peak of the holiday shopping season.

Historic Health Care Relative Strength

Dec 2, 2025

While stocks are getting off to a quiet start to December, the S&P 500 staged a solid recovery in the final week of November to manage a modest 13 bps gain on the month.  Below, we show the performance spread of each S&P 500 sector versus the overall index in November.  As shown, a majority of sectors actually outdid the index during the month with only Technology, Consumer Discretionary, and Industrials having underperformed. Tech in particular was a significant underperformer given it’s oversized weight; the monthly performance spread ranked in the bottom decile of all months since 1990. Conversely, Materials, Consumer Staples, Communication Services, and Health Care’s performance relative to the S&P 500 ranked in the top decile for all months since 1990. Health Care beat the S&P by nine percentage points in November, which was in the 98th decile for all months since 1990.

As shown below, it has been exceptionally uncommon for Health Care to outperform the broader market by such a wide degree. The last time the sector’s one-month outperformance was nearly as strong was in March 2020 when it outpaced the S&P 500 by a slightly smaller 8.54 percentage points. Prior to that, the only period with 9 percentage points or more like this November was a string of months in 2000 and 2001. Additionally, we would note that this latest big month for Health Care came only six months after one of its worst months on record versus the broad market; in May the sector fell 5.7% versus the S&P 500’s gain of 6.2%.

Health Care fell almost 1.5% yesterday to start off December and is again weak today. That was the sector’s first decline on the first trading day of a month since May.  As shown below, that ends the longest streak of daily gains on the first day of a month since a seven month long streak ending in July 2017.

Switching over to a different sector, Communication Services also fell yesterday with an over 1% decline.  That extends a losing streak of declines on the first day of a month to six months. Given the sector reshuffling in 2018, Communication Services has a different makeup today than it did in the years prior to the reshuffling.   With that caveat in mind, there has only been one other period in which it fell on the first day of a month each month for half a year: October 2006 through March 2007.