On Monday, the S&P 500 Index ($SPX) (SPY) closed down -0.16%, the Dow Jones Industrials Index ($DOWI) (DIA) closed down -0.09%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed down -0.51%. December E-mini S&P futures (ESZ25) fell -0.14%, and December E-mini Nasdaq futures (NQZ25) fell -0.51%.
Stock indexes gave up early gains on Monday and fell to lower levels, with the S&P 500 falling to a 2-week low and the Nasdaq 100 falling to a 2.5-week low. Stocks closed lower on Monday ahead of Tuesday’s key November payrolls report. Additionally, energy stocks retreated after crude oil prices fell to a 1.75-month low, and cryptocurrency-exposed stocks declined after Bitcoin fell more than -4% to a 2-week low.
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Last Friday’s decline in stocks continued on Monday due to concerns over artificial intelligence spending. Broadcom closed down more than -5%, and Oracle fell more than -2% Leading the decline in AI-infrastructure stocks, as disappointing outlooks from Oracle and Broadcom last week have prompted some investors to exit the tech sector amid high valuations and uncertainty over whether heavy spending on AI infrastructure will ultimately pay off.
Dovish Fed comments on Monday were helpful for stocks. Fed Governor Stephen Miron said the Fed’s policy stance is unnecessarily restrictive for the economy, citing the benign inflation outlook and labor-market warning signals. Additionally, NY Fed Chairman John Williams said, “Amidst elevated employment risks and somewhat reduced inflation risks, the FOMC has moved the moderately accommodative stance of monetary policy to neutral.”
Monday’s US economic news was mixed for stocks. The December Empire Manufacturing Survey of general business conditions unexpectedly declined by -22.6 points to -3.9, weaker than expectations of 10.0. Also, the December NAHB Housing Market Index rose +1 to an 8-month high of 39, in line with expectations.
Weaker than expected Chinese economic news is negative for global growth prospects. China’s November industrial production unexpectedly declined to +4.8% y/y from +4.9% y/y in October, while growth was expected to be +5.0% y/y. Additionally, China’s November retail sales grew +1.3% year-on-year, weaker than expectations of +2.9% year-on-year and the smallest pace of growth in 2.75 years. Additionally, new home prices in China declined 0.39% per month, marking the 30th consecutive month of decline.
This week the market’s focus will be on American economic news. On Tuesday, nonfarm payrolls are expected to increase by +50,000 in November, and the unemployment rate is expected to be 4.5% in November. Meanwhile, average hourly earnings are expected to increase +0.3% m/m and +3.6% y/y in November. Also, on Tuesday retail sales are expected to increase +0.1% per month in October, and ex-auto retail sales are expected to increase +0.2% per month in October. Finally, the December S&P Manufacturing PMI is expected to decline by -0.2 to 52.0 on Tuesday. On Thursday, weekly initial unemployment claims are expected to fall -11,000 to 225,000. Furthermore, November CPI is expected to be +3.1% y/y, and November Core CPI is expected to be +3.0% y/y. Existing home sales are expected to be +1.2% m/m to 4.15 million on Friday, November. Additionally, the University of Michigan’s December consumer sentiment index is expected to be revised up +0.2 to 53.5 from 53.3 previously reported.
Markets are giving a 22% discount on the likelihood that the FOMC will cut the fed funds target range by 25 bp at the next FOMC meeting on January 27-28.
There was a mixed trend in foreign stock markets on Monday. Euro Stoxx 50 closed up +0.56%. China’s Shanghai Composite closed down -0.55%. Japan’s Nikkei stock closed down 225 -1.31%.
interest rates
March 10-year T-notes (ZNH6) closed at +3.5 ticks on Monday. The 10-year T-note yield fell -0.4bp to 4.180%. T-notes rose on Monday after the December Empire Manufacturing Survey showed general business conditions unexpectedly contracted, a softening factor for Fed policy. T-notes were also supported by dovish comments from Fed Governor Stephen Miron, who said the Fed’s policy stance is unnecessarily restrictive for the economy. T-notes fell from their best levels after the December NAHB Housing Market Index hit an 8-month high.
The rising yield curve is bearish for T-note prices. Sharp trading occurs when bond investors buy short-term government debt and sell long-term debt. The yield curve has steepened since last Wednesday’s FOMC meeting, when the Fed said it would begin buying up to $40 billion per month of short-term T-bills starting today to boost liquidity in the financial system. Long-term Treasury securities are also under pressure from concerns about inflation and the Fed’s independence.
European government bond yields edged lower on Monday. The 10-year German Bund yield fell -0.4bp to 2.853%. 10-year UK gilt yields fell -2.1bp to 4.496%.
Eurozone industrial production rose +0.8% m/m in October, meeting expectations and the biggest increase in 5 months.
The swaps are offering a 0% discount to a -25bp rate cut by the ECB at its next policy meeting on Thursday.
US Stock Movers
Cryptocurrency-exposed stocks fell on Monday as Bitcoin (^BTCUSD) fell more than -4% to a 2-week low. Riot Platforms (RIOT) is down more than -7%, and Galaxy Digital Holdings (GLXY) is down more than -6%. Additionally, Strategyzer (MSTR) and Mara Holdings (MARA) are down more than -5%, and Coinbase Global (COIN) is down more than -3%.
Energy producers and energy service providers retreated on Monday as WTI crude oil fell more than -1% to a 1.75-month low. Devon Energy (DVN) closed down more than -3%. Additionally, APA Corp (APA) and Occidental Petroleum (OXY) closed down more than -2%. Additionally, ConocoPhillips (COP) and Diamondback Energy (FANG) closed down more than -1%.
ServiceNow (NOW) closed down more than -10% to lead the losers in the S&P 500 after KeyBanc Capital Markets downgraded the stock to Underweight from Sector Weight with a price target of $775.
ARM Holdings PLC (ARM) closed down more than -5% after Goldman Sachs downgraded the stock to Sell from Neutral with a price target of $120.
Builders FirstSource (BLDR) closed down more than -3% after Jefferies downgraded the stock from Buy to Hold.
LyondellBasell Industries NV (LYB) closed down more than -2% after BMO Capital Markets downgraded the stock to Underperform with a $36 price target.
Entegris Inc. after Goldman Sachs downgraded the stock to sell from neutral with a price target of $75. (ENTG) closed down by more than -2%.
Adobe (ADBE) closed down more than -2% after KeyBanc Capital Markets downgraded the stock from Sector Weight to Underweight with a price target of $310.
Immunome (IMNM) closed up more than +13% after announcing positive results from the Phase 3 trial of its veragestat in patients with desmoid tumors.
ZIM Integrated Shipping Services (ZIM) closed up more than +8% after Calcalist reported that MSC has submitted a bid to buy the company.
Bristol-Myers Squibb (BMY) closed up more than +3% after Bank of America Global Research upgraded the stock to buy from neutral with a price target of $61.
The Hershey Company (HSY) closed up more than +3% after Morgan Stanley upgraded the stock from equal weight to overweight with a price target of $211.
CoreBridge Financial (CRBG) closed up more than +2% after S&P Dow Jones Indices said the stock would replace Alet Inc. in the S&P MidCap 400 before the start of trading on Wednesday, December 17.
KLA Corp (KLAC) closed up more than +2% after Jefferies upgraded the stock to buy from hold with a price target of $1,500.
Charles River Laboratories (CRL) closed up more than +2% after JPMorgan Chase raised its price target on the stock from $165 to $190.
Income Report(12/16/2025)
CSP Inc (CSPI), Golden Matrix Group Inc (GMGI), Immersion Corp (IMMR), Lennar Corp (LEN), RCI Hospitality Holdings Inc (RICK), Worthington Enterprises Inc (WOR).
On the date of publication, Rich Asplund did not have (directly or indirectly) any positions in any securities mentioned in this article. All information and data in this article is for informational purposes only. Please see the Barchart Disclosure Policy here for more information.
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