Stocks Recover on Strength in Megacap Tech and Energy Producers

The S&P 500 Index ($SPX) (SPY) today is down -0.06%, the Dow Jones Industrials Index ($DOWI) (DIA) is down -0.67%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +0.11%.  December E-mini S&P futures (ESZ25) are down -0.05%, and December E-mini Nasdaq futures (NQZ25) are up +0.12%.

US stock indexes recovered from their worst levels today and are trading mixed after the Magnificent Seven technology stocks recovered from early losses and moved higher.  Also, strength in energy producers is positive for the overall market, as WTI crude oil prices rose by more than +2%.

Stocks initially extended Thursday’s sell-off today amid concerns about a hawkish Fed pivot.  Doubts over a Fed interest rate cut next month have fueled jitters about stretched valuations of AI-infrastructure and semiconductor stocks and sparked long liquidation in stocks and risk-off sentiment in asset markets. 

The chances of a Fed rate cut at December’s FOMC meeting have dropped to 48% today from 70% last week, after a parade of Fed officials this week expressed skepticism about the need for additional rate cuts, citing the economy’s resilience and lingering uncertainty about inflation. 

Hawkish comments today from Kansas City Fed President Jeff Schmid were bearish for stocks and bonds when he said, “I don’t think further cuts in interest rates will do much to patch over any cracks in the labor market, but could have longer-lasting effects on inflation as our commitment to our 2% objective increasingly comes into question.”

Weak economic news from China today added to concerns about global growth prospects and weighed on stocks.  China’s Oct industrial production rose +4.9% y/y, weaker than expectations of +5.5% y/y and the smallest increase in 14 months.  Also, China’s Oct new home prices fell -0.45% m/m, the biggest decline in a year and the twenty-ninth consecutive month that new home prices have fallen. 

The price of Bitcoin (^BTCUSD) is down more than -2% at a 6.25-month low as the 5-week-long sell-off continues. Bitcoin has fallen by -24% from its record high last month amid heavy long liquidation pressure.  Bitcoin ETFs saw net outflows of about $870 million on Thursday, the second-largest daily withdrawal since trading in Bitcoin ETFs began.

On Wednesday, President Trump signed legislation that ended the longest US government shutdown in history.  The bill provides full-year funding for some departments, funds other agencies through January 30, and includes pay for furloughed government workers. The bill also resumes federal payments to states and localities and recalls agency employees who were laid off during the shutdown. 

The Congressional Budget Office (CBO) projected that the six-week government closure reduced real GDP growth in the current quarter by 1.5 percentage points.  However, more than half of the loss may be recovered early next year as federal programs resume and government employees receive back pay, according to the CBO.

The White House on Wednesday said that the monthly October payrolls report and consumer price index are unlikely to be released due to the government shutdown.  The Bureau of Labor Statistics is expected to publish a calendar in the coming days with updated release dates for delayed economic data.

The markets are discounting a 48% chance of another -25 bp rate cut at the next FOMC meeting on December 9-10.

Q3 corporate earnings season is drawing to a close.  According to Bloomberg Intelligence, 82% of reporting S&P 500 companies exceeded forecasts, on course for the best quarter since 2021.  Q3 earnings rose +14.6%, more than doubling expectations of +7.2% y/y. 

Overseas stock markets are lower today.  The Euro Stoxx 50 is down -1.09%.  China’s Shanghai Composite fell from a 10-year high and closed down -0.97%.  Japan’s Nikkei Stock 225 closed down -1.77%.

Interest Rates

December 10-year T-notes (ZNZ5) today are down by -2 ticks.  The 10-year T-note yield is up +0.9 bp to 4.1194%.  T-notes are under pressure today following hawkish comments from Kansas City Fed President Jeff Schmid.  T-notes also have negative carryover from Thursday, when several Fed presidents cautioned against further rate cuts amid uncertainty over inflation, which knocked the chances for a rate cut at next month’s FOMC meeting to 48% today from 70% last week.  T-notes recovered from their worst level today as an early slump in equity markets has fueled safe-haven demand for government debt.

European government bond yields are moving higher today.  The 10-year German bund yield rose to a 5-week high of 2.715% and is up +2.2 bp to 2.710%.  The 10-year UK gilt yield climbed to a 1-month high of 4.579% and is up +12.5 bp to 4.562%.

Eurozone Q3 GDP was revised upward by +0.1 to +1.4% y/y from the previously reported +1.3% y/y.

Swaps are discounting a 4% chance for a -25 bp rate cut by the ECB at its next policy meeting on December 18.

US Stock Movers

The Magnificent Seven technology stocks recovered from early losses and moved higher today, a positive factor for the broader market.  Nvidia (NVDA) is up more than +1%.  Also, Tesla (TSLA) is up +0.94%, Microsoft (MSFT) is up +0.64%, Apple (AAPL) is up +0.50%, Meta Platforms (META) is up +24%, and Amazon.com (AMZN) is up +0.18%.  However, Alphabet (GOOGL) is down -0.18%. 

Energy producers and energy service providers are moving higher today, with WTI crude oil up more than +2%.  Valero Energy (VLO) and Marathon Petroleum (MPC) are up more than +2%.  Also, Diamondback Energy (FANG), Devon Energy (DVN), Phillips 66 (PSX), Baker Hughes (BKR), Halliburton (HAL), Occidental Petroleum (OXY), and ConocoPhillips (COP) are up more than +1%. 

Cryptocurrency-exposed stocks are falling today, with Bitcoin down more than -2% at a 6.25-month low.  Coinbase Global (COIN), Galaxy Digital (GLXY), MARA Holdings (MARA), Riot Platforms (RIOT), and Strategy (MSTR) are down more than -3%.   

Stubhub Holdings (STUB) is down more than -24% after reporting a Q3 loss per share of -$4.27, wider than the consensus of -$2.49, and failed to provide a forecast for Q4. 

Manitowoc (MTW) is down more than -4% after Wells Fargo Securities initiated coverage on the stock with a recommendation of underweight, with a price target of $9. 

Bristol-Myers Squibb (BMY) is down more than -3% after ending a trial of its experimental drug milvexian to prevent strokes and blood clots following disappointing data.

Walmart (WMT) is down more than -1% after announcing that CEO Doug McMillon is retiring, effective February 1, 2026, and will be replaced by John Furner.

Cidara Therapeutics (CDTX) is up more than +105% after Merck & Co. agreed to acquire the company for about $9.2 billion or $221.50 a share. 

Avadel Pharmaceuticals (AVDL) is up more than +20% after it said it received an unsolicited proposal from H. Lundbeck A/S to acquire it for $23 per share. 

Warner Bros Discovery (WBD) is up more than +3% after the Wall Street Journal reported that Paramount, Comcast, and Netflix are preparing to bid for the company. 

Nubank (NU) is up more than +2% after reporting Q3 total revenue of $4.17 billion, better than the consensus of $3.92 billion. 

Shake Shack (SHAK) is up more than +1% after Loop Capital Markets upgraded the stock to buy from hold with a price target of $127.

Gap Inc. (GAP) is up more than +1% after Jeffries upgraded the stock to buy from hold with a price target of $30. 

Earnings Reports(11/14/2025)

Qnity Electronics Inc (Q).