Market Overview
Today, the S&P 500 Index is down slightly at -0.02%, while the Dow Jones Industrial Average has seen a larger drop of -0.25%. In contrast, the Nasdaq 100 Index is up by +0.33%. E-mini S&P futures for December are down by -0.03%, and E-mini Nasdaq futures have risen by +0.30%.
Stock indexes are showing mixed results today. Rising bond yields typically have a negative impact on stocks; the 10-year T-note yield has climbed to a two-week high of 4.16%, marking a rise of +1 basis point. However, there’s some support for stocks coming from expectations that the Federal Reserve might reduce interest rates after their two-day FOMC meeting wrapping up on Wednesday. It’s also worth noting that December usually leans bullish for the market, and today’s robust performance in semiconductor stocks is a positive sign overall.
Mergers and acquisitions, along with favorable corporate news, are boosting stock prices today. Confluent shares surged over +27% following IBM’s acquisition of the firm for approximately $11 billion, debt included. Carvana also saw a more than +7% increase after being announced as a replacement for LKQ Corp in the S&P 500, which will take effect before trading starts on Monday, December 22nd.
This week, markets will monitor government reports and the FOMC meeting closely. Job openings as reported in JOLTS are anticipated to rise by 7,150 for October, with the employment cost index for Q3 expected to show an increase of +0.9% on Wednesday. Many market participants foresee a 25 basis point cut to the federal funds target range, bringing it down to between 3.50% and 3.75%. Investors will also be keen on Fed Chairman Jerome Powell’s comments post-meeting regarding future interest rate trajectories. On Thursday, new jobless claims are expected to increase by 29,000 to 220,000.
A recently released trade report from China presents a mixed picture. Exports for November rose by +5.9% year-over-year, surpassing expectations of +4.0%. However, imports showed only a minor increase of 1.9%, falling short of the anticipated +3.0% increase.
In a recent announcement, President Trump stated that he plans to announce a new Fed chair selection in early 2026. Reports suggest that Kevin Hassett, currently the chairman of the National Economic Council, is viewed as a potential successor to Powell. Hassett’s support for Trump’s strategy of reducing Fed interest rates could raise questions about the central bank’s independence.
The markets appear to factor in a 100% likelihood of another 25 basis point rate cut following Wednesday’s FOMC meeting.
The third-quarter earnings season is nearing completion, with 495 S&P 500 companies reporting. Bloomberg Intelligence indicates that 83% of these companies beat expectations, on track to deliver their best quarter since 2021. Furthermore, third-quarter profits have surged +14.6%, which is considerably higher than the year-over-year estimate of +7.2%.
Overseas stock markets are experiencing upticks today. The Euro Stoxx50 is slightly up by +0.03%. Meanwhile, China’s Shanghai Composite Index recovered to a two-week high, finishing with a gain of +0.54%. Japan’s Nikkei Stock Average closed up +0.18%.
Interest Rates
The March 10-year T-note fell by -3 ticks today. The yield on the 10-year T-note edged up by 1.2 basis points to 4.147%, reaching a new two-week high of 4.159%. The decline in T-note prices seems to link back to the pressure from rising stock prices. Additionally, the Treasury Department plans to auction $119 billion of T-notes and T-bonds this week, starting with today’s $58 billion auction of three-year T-notes. The impact from Japan’s bond market also looms, as Japan’s 10-year government bond prices hit an 18-year low amid expectations of a rate increase by their central bank this month.
European government bond yields are also on the rise today. The yield on 10-year German Bunds has climbed to 2.846%, marking its highest point in over eight months. The UK 10-year annuity yield has risen to 4.524%, an increase of +2.0 basis points.
The Eurozone’s Centix Investor Confidence Index for December shows a rise of +1.2 to -6.2, surpassing the expected -6.3.
In Germany, industrial production grew by 1.8% in October compared to the previous month, exceeding the expectation of a +0.3% rise and marking the first significant increase in seven months.
Isabel Schnabel, a board member of the ECB, has stated that risks surrounding the eurozone economy and inflation lean towards the upside, expressing confidence that the next rate hike from the ECB will indeed occur.
Currently, the market seems to discount the possibility of a 25 basis point rate cut by the ECB at their upcoming policy meeting on December 18th.
US Securities Update
Today, chipmakers are leading gains in the market. Micron Technology is up over +4%, while Broadcom has climbed more than +3%. Additionally, Advanced Micro Devices, Lam Research, and ASML Holding have all shown increases of over +2%. Other notable gainers include NVIDIA, ON Semiconductor, KLA Corporation, and Microchip Technology, each rising by more than 1%.
Companies tied to cryptocurrencies are also seeing boosts today, with Bitcoin climbing over +3%. Other notable stocks include Strategy, Coinbase, and MARA Holdings, each up more than +2%. Additionally, Galaxy Digital and Riot Platforms are rising by over 1%.
Kymers Therapeutics saw a significant rise, up more than +41%, after announcing positive results from its clinical trial for a treatment for atopic dermatitis.
Confluent’s shares soared over +27% after being acquired by IBM for approximately $11 billion, which translates to about $31 per share.
Warner Bros. Discovery was among the top gainers on the S&P 500 and Nasdaq, rising over 6% after receiving a buyout offer of $30 per share from Paramount Skydance, surpassing Netflix’s offer.
Carvana’s stock rose more than +7% following its S&P 500 inclusion announcement. CRH Plc shares also jumped over +5% after being slated to replace another company in the index.
Compass Inc. continued its upward trend, gaining over 4% after Barclays upgraded its stock rating and set a target price of $13.
In contrast, Marvell Technology is experiencing the largest decline on the Nasdaq 100, dropping over -8% after a downgrade from Benchmark Company. Coreweave shares fell more than -5% after announcing a plan to issue $2 billion in convertible notes. Range Resources, Rivian Automotive, and Lennar are all down more than -2% due to recent downgrades by various financial institutions.
Tesla’s stock has also slipped by more than -2% following a downgrade from Morgan Stanley.
Earnings Reports Coming Up
Upcoming earnings reports include those from Barnes & Noble Education, Compass Minerals, Mama’s Creations, Oil-Dri Corp, Ooma, Phreesia, Rezolve AI PLC, and Toll Brothers.
