Stocks Supported by Strength in Tech and Fed Rate Cut Expectations

The S&P 500 Index ($SPX) (SPY) today is up by +0.61%, the Dow Jones Industrials Index ($DOWI) (DIA) is up by +0.18%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up by +1.51%.  December E-mini S&P futures (ESZ25) are up +0.61%, and December E-mini Nasdaq futures (NQZ25) are up +1.44%.

US stock indexes are pushing higher today on strength in technology stocks and rising expectations for a December Fed interest rate cut.  Semiconductor and AI-infrastructure stocks are adding to last Friday’s rebound after the sectors retreated on concerns over lofty valuations and whether heavy investment in artificial intelligence will boost profitability. 

T-note yields are moving lower today, providing support to stocks, after Fed Governor Christopher Waller said he's advocating for a December rate cut by the Fed due to concerns about the labor market, and then taking a meeting-by-meeting approach starting in January.  The 10-year T-note yield is down -1 bp to 4.05%.

The Bureau of Labor Statistics (BLS) canceled its October consumer price report last Friday and said the November report will be released on December 18.  Last Wednesday, the BLS said it would not publish an October employment report and noted that it will incorporate those payroll figures into the November report, set to be published on December 16. 

The markets will look to this week’s economic news for direction. On Tuesday, Sep retail sales are expected to climb +0.4% m/m and +0.3% m/m ex-autos.  Also, Sep PPI is expected to remain unchanged from Aug at +2.6% y/y, and Sep core PPI is expected to ease to +2.7% y/y from +2.8% y/y in Aug.  In addition, The Conference Board’s Nov consumer confidence index is expected to fall by 1.2 points to 93.4.  Finally, on Tuesday, Oct pending home sales are expected to climb +0.1% m/m.  Wednesday brings weekly initial unemployment claims (expected +6,000 to 226,000), Sep capital goods new orders nondefense ex-aircraft and parts (expected +0.3% m/m), the Nov MNI Chicago PMI (expected +0.2 to 44.0), and the Fed Beige Book. 

The markets are discounting a 70% 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 as 466 of the 500 S&P companies have released results.  According to Bloomberg Intelligence, 83% 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 higher today.  The Euro Stoxx 50 is up +0.23%.  China’s Shanghai Composite recovered from a 6-week low and closed up +0.05%.  Japan’s Nikkei Stock 225 did not trade as Japanese markets closed for the Labor Thanksgiving Day holiday.

Interest Rates

December 10-year T-notes (ZNZ5) today are up by +2 ticks.  The 10-year T-note yield is down -2.1 bp to 4.042%.  T-notes are slightly higher today after Fed Governor Christopher Waller said he's advocating for a December rate cut by the Fed due to concerns about the labor market, which boosted the chances of a Fed rate cut at the December 9-10 FOMC meeting to 70% from 30% last Thursday.  Today's strength in stocks has curbed safe-haven demand for T-notes.  Supply pressures are also limiting gains in T-notes as the Treasury will auction $211 billion in T-notes and floating-rate notes this week, beginning with today’s $69 billion auction of 2-year T-notes.  

European government bond yields are moving lower today.  The 10-year German bund yield is down -0.7 bp to 2.696%. The 10-year UK gilt yield is down -1.4 bp to 4.532%.

The German Nov IFO business climate unexpectedly fell -0.4 to 88.1, weaker than expectations of an increase to 88.5.

Swaps are discounting a 2% chance for a -25 bp rate cut by the ECB at its next policy meeting on December 18.

US Stock Movers

Chip makers and AI-infrastructure stocks are moving higher today, providing support to the broader market.  Broadcom (AVGO) is up more than +6% to lead gainers in the Nasdaq 100, and Western Digital (WDC) is up more than +6%.  Also, Micron Technology (MU) is up more than +5%, and Advanced Micro Devices (AMD), Marvel Technology (MRVL), and Lam Research (LRCX) are up more than +3%.  In addition, KLA Corp (KLAC), Applied Materials (AMAT), Intel (INTC), and ARM Holdings Plc (ARM) are up more than +2%. 

Healthcare insurers and providers are moving higher today after Politico reported the Trump administration is preparing a two-year health insurance premium tax credit extension.  Centene (CNC) is up more than +7% to lead gainers in the S&P 500.  Also, Elevance Health (ELV) is up more than +4% and Molina Healthcare (MOH) is up more than +3%.  In addition, UnitedHealth Group (UNH) is up +0.60%. 

Inspire Medical Systems (INSP) is up more than +18% after Nephron Research LLC upgraded the stock to buy from hold with a price target of $145. 

Lumentum (LITE) is up more than +9% after Needham & Co. raised its price target on the stock to $290 from $235.  

Carvana (CVNA) is up more than +5% after Wedbush Securities upgraded the stock to outperform from neutral with a price target of $400.

Merck & Co. (MRK) is up more than +3% to lead gainers in the Dow Jones Industrials after Wells Fargo Securities upgraded the stock to overweight from equal weight with a price target of $125.  

Bristol-Myers Squibb (BMY) is up more than +3% after peer developer, Bayer AG, said an experimental stroke-prevention drug showed positive results in a late-stage study. 

Biogen (BIIB) is up more than +2% after rival Novo Nordisk said the pill version of its Ozempic failed to slow the progression of Alzheimer’s disease in two late-stage studies. 

Frontline Plc (FRO) is down more than -5% after Clarksons Securities downgraded the stock to neutral from buy. 

PureCycle Technologies (PCT) is down more than -5% after TD Cowen downgraded the stock to hold from buy.

Performance Food Group (PFGC) is down more than -2% after US Foods said it is no longer pursuing a merger with the company. 

Earnings Reports(11/24/2025)

Agilent Technologies Inc (A), Amentum Holdings Inc (AMTM), Keysight Technologies Inc (KEYS), Woodward Inc (WWD), Zoom Communications Inc (ZM).