The S&P 500 Index ($SPX) (SPY) closed Monday down -0.35%, the Dow Jones Industrials Index ($DOWI) (DIA) closed down -0.45%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed down -0.25%. E-mini S&P December futures (ESZ25) fell -0.35% and E-mini Nasdaq December futures (NQZ25) fell -0.27%.
Stock indices stabilized lower on Monday, under pressure from rising bond yields. The yield on the 10-year T-note climbed to a 2.25-month high of 4.19% on Monday and ended up +4 bps at 4.17%. However, stocks are getting support from expectations that the Fed will cut interest rates after the two-day FOMC meeting that ends Wednesday. Seasonal market fluctuations also support stocks, as December is typically a bull month. Strength in chip stocks Monday limited the Nasdaq 100’s losses.
M&A activity and positive company news are also supporting stocks. Confluent closed up more than +29% after IBM acquired the company for approximately $11 billion, including debt. Additionally, Carvana closed up over +12% after the S&P Dow Jones Indices announced that the company would replace LKQ Corp in the S&P 500 before trading began on Monday, December 22.
Markets will focus this week on government reports and the FOMC meeting. On Tuesday, October JOLTS job openings are expected to increase by 7,150. On Wednesday, the third quarter employment cost index is expected to increase by +0.9%. Results from Tuesday and Wednesday’s FOMC meeting are expected to show a -25 bps reduction in the federal funds target range to 3.50%-3.75%. Markets will also look at the Fed’s summary of economic projections and its point interest rate forecasts. Additionally, Fed Chair Powell’s post-meeting comments on Wednesday about the future direction of interest rates could move markets. On Thursday, the first weekly unemployment claims should increase by +29,000 to reach 220,000.
Monday’s Chinese trade report was mixed, with China’s November exports increasing +5.9% year-on-year, better than expectations of +4.0% year-on-year. However, November imports only increased by +1.9% year-on-year, lower than expectations of +3.0% year-on-year.
President Trump said last Tuesday that he would announce his selection for the new Fed chair in early 2026. Bloomberg reported last week that National Economic Council Director Kevin Hassett was considered the likely choice to succeed Powell. The Fed’s independence would be called into question, as Hassett supports President Trump’s approach to cutting Fed interest rates.
Markets are pricing in a 99% chance of another -25 basis point rate cut following Wednesday’s two-day FOMC meeting.
The third quarter corporate earnings season is coming to an end as 495 of the S&P 500 companies have released their results. According to Bloomberg Intelligence, 83% of S&P 500 companies beat forecasts, marking the best quarter since 2021. Third-quarter earnings rose +14.6%, more than double expectations of +7.2% year over year.
Foreign stock markets stabilized higher on Monday. The Euro Stoxx 50 closed up +0.03%. China’s Shanghai Composite Index hit a 2-week high and closed up +0.54%. The Japanese Nikkei Stock 225 closed up +0.18%.
Interest rate
March 10-year Treasuries (ZNH6) closed down -8.5 ticks on Monday. The yield on the 10-year T-note increased by +3.5 bp to 4.17%. March Treasury futures fell to a 2.25-month low Monday, and the 10-year Treasury yield hit a 2.25-month high of 4.19%. Supply pressures are pushing down Treasury prices as the Treasury auctions $119 billion worth of Treasury bills and bonds this week. Additionally, Treasuries are weighed down by the negative carryover effect of a fall in prices of Japan’s 10-year JGB bonds to an 18-year low today, amid prospects of a BoJ rate hike later this month. Treasuries recovered from their worst levels on strong demand sparked by the Treasury’s auction of $58 billion of 3-year Treasury notes, which had a bid-to-cover ratio of 2.64, better than the 10-auction average of 2.63.
European government bond yields rose on Monday. The 10-year German Bund yield climbed to an 8.5-month high of 2.876% and ended up +6.3 bps at 2.862%. The UK 10-year gilt yield hit a 1.5-week high of 4.546% and ended up +5.2bps at 4.528%.
The Dec Sentix Eurozone Investor Confidence Index rose from +1.2 to -6.2, slightly above expectations of -6.3.
German October industrial production rose +1.8% m/m, stronger than expectations of +0.3% m/m and the biggest increase in 7 months.
ECB board member Isabel Schnabel said risks to the euro zone economy and inflation were tilted to the upside, and she is “rather comfortable” with market expectations that the ECB’s next interest rate hike will be an increase.
Swaps estimate there is a 1% chance that the ECB will cut rates by -25 basis points at its next policy meeting on December 18.
Stock movers in the United States
Chipmakers rose on Monday, a supportive factor for stocks. Micron Technology (MU) closed up over +4% and ON Semiconductor (ON) closed up +3%. Additionally, Microchip Technology (MCHP), Broadcom (AVGO), GlobalFoundries (GFS), and Lam Research (LRCX) closed up over +2%. Additionally, ASML Holding NV (ASML), Nvidia (NVDA), and Advanced Micro Devices (AMD) closed up more than +1%.
Air Products and Chemicals (APD) closed down more than -9%, ranking among the S&P 500 losers after the company announced it was working with Yara International to establish a long-term partnership on two ammonia projects in the United States and Saudi Arabia.
Marvell Technology (MRVL) closed down more than -6% and led the Nasdaq 100 losers after Benchmark Company LLC downgraded the stock to Hold from Buy.
Range Resources (RRC) closed down over -4% after JPMorgan Chase lowered the stock’s rating from neutral to underweight with a $39 price target.
Tesla (TSLA) closed down more than -3% after Morgan Stanley downgraded the stock’s rating from overweight to equal weight.
Boston Scientific (BSX) closed down more than -3% after Nephron Research downgraded the stock from Buy.
Rivian Automotive (RIVN) closed down more than -2% after Morgan Stanley lowered the stock’s rating from underweight to equal weight with a $12 price target.
Lennar (LEN) closed down more than -2% after Barclays lowered the stock’s rating from underweight to equal weight with a $98 price target.
CoreWeave (CRWV) closed down more than -2% after announcing plans to offer $2 billion of convertible senior notes due 2031 in a private offering.
Kymers Therapeutics (KYMR) closed more than +41% after announcing positive clinical results from its Phase 1b BroADen trial of KT-621, an oral STAT6 degrader, in patients with moderate to severe atopic dermatitis.
Confluent (CFLT) closed up over +29% after the company was acquired by International Business Machines for approximately $11 billion, or approximately $31 per share.
Carvana (CVNA) closed up over +12% after the S&P Dow Jones Indices announced that the company would replace LKQ Corp in the S&P 500 before trading began on Monday, December 22.
Paramount Skydance (PSKY) closed up more than +9% to lead the S&P 500 gainers after launching a hostile takeover bid for Warner Bros Discovery.
CRH Plc (CRH) closed up over +5% after the S&P Dow Jones Indices announced that the company would replace Solstice Advanced Materials in the S&P 500 before trading began on Monday, December 22.
Inspire Medical Systems (INSP) closed up over +5% after Oppenheimer & Co. upgraded the stock to Outperform from Market Perform with a $175 price target.
Warner Bros. Discovery (WBD) closed up more than +4% and became the leading gainer on the Nasdaq 100 after Paramount Skydance offered $30 per share for the company, above Netflix’s offer of $27.75 per share.
Income Reports (12/9/2025)
AutoZone Inc (AZO), Campbell’s Company/The (CPB), Casey’s General Stores Inc (CASY), Core & Main Inc (CNM), Ferguson Enterprises Inc (FERG), GameStop Corp (GME), Ollie’s Bargain Outlet Holding (OLLI), SailPoint Inc (SAIL).
As of the date of publication, Rich Asplund did not hold (either directly or indirectly) any positions in any of the securities mentioned in this article. All information and data contained in this article are for informational purposes only. This article was originally published on Barchart.com
