Stocks Fall Back as Nvidia Drags Chip Makers Lower

The S&P 500 Index ($SPX) (SPY) today is down by -0.35%, the Dow Jones Industrials Index ($DOWI) (DIA) is up by +0.26%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down by -1.04%.  December E-mini S&P futures (ESZ25) are down -0.40%, and December E-mini Nasdaq futures (NQZ25) are down -1.09%.

Stock indexes are under pressure today, giving back some of Monday’s sharp rally.  Nvidia is down more than -5% to lead chip stocks lower after The Information reported that Meta Platforms is in talks to spend billions on Google’s AI chips, known as tensor processing units (TPUs), in data centers in 2027.  An agreement would suggest that Google is making headway in efforts to rival Nvidia’s AI accelerator chips and would help establish TPUs as an alternative to Nvidia’s chips.  Alphabet, the parent company of Google, is up more than +2% on the news.

US stock indexes found support from today’s dovish US economic news, which knocked bond yields lower and strengthened the case for the Fed to cut interest rates at next month’s FOMC meeting.  Sep retail sales and Sep core PPI rose less than expected, and ADP's weekly data showed private payrolls declined, knocking the 10-year T-note yield to a 3.5-week low of 4.00% and increasing the chance of a Fed rate cut at the December 9-10 FOMC meeting to 80%.

US Sep retail sales rose +0.2% m/m, weaker than expectations of +0.4% m/m.  Sep retail sales ex-autos rose +0.3% m/m, right on expectations.

US Sep PPI final demand rose +2.7% y/y, stronger than expectations of +2.6% y/y.  However, Sep PPI ex-food and energy rose +2.6% y/y, weaker than expectations of +2.7% y/y.

The US Sep S&P CaseShiller composite-20 home price index rose +1.36% y/y, weaker than expectations of +1.40% y/y and the smallest pace of increase in more than two years.

The latest weekly update from ADP showed US private payrolls fell -13,500 a week, on average, in the four weeks ending November 8.

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 would incorporate those payroll figures into the November report, scheduled for publication on December 16. 

The markets will look to this week’s economic news for direction. Later today, the Conference Board’s Nov consumer confidence index is expected to fall by -1.3 points to 93.3. 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 an 80% 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 +0.68%.  China’s Shanghai Composite closed up +0.87%.  Japan’s Nikkei Stock 225 closed up +0.07%.

Interest Rates

December 10-year T-notes (ZNZ5) are up by +4 ticks.  The 10-year T-note yield is down -1.5 bp to 4.019%.  Dec T-notes climbed to a 1-month high today, and the 10-year T-note yield fell to a 3.5-week low of 4.002%.  T-notes are moving higher after today’s US economic news showed that Sep retail sales and Sep core PPI rose less than expected, and weekly data from ADP showed private payrolls declined, which are dovish factors for Fed policy.  Also, falling inflation expectations are bullish for T-notes after the 10-year breakeven inflation rate fell to a 7.25-month low of 2.212% today. 

Supply pressures are negative for T-notes as the Treasury will auction $28 billion 2-year floating rate notes and $70 billion 5-year T-notes later today as part of this week’s slate of $211 billion in T-notes and floating-rate note auctions.  

European government bond yields are moving lower today.  The 10-year German bund yield is down -1.3 bp to 2.679%. The 10-year UK gilt yield fell to a 1-week low of 4.498% and is down -3.3 bp to 4.504%.

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

Nvidia (NVDA) is down more than -5% to lead losers in the Dow Jones Industrials and drag chip makes lower after The Information reported that Meta Platforms is in talks to spend billions on Google’s AI chips, suggesting Google is making headway in efforts to rival Nvidia’s dominance in AI chips.  Also, Advanced Micro Devices (AMD) is down more than -7% to lead losers in the S&P 500 and Nasdaq 100.  In addition, ARM Holdings Plc (ARM) and Analog Devices (ADI) are down more than -2%, and Micron Technology (MU), Texas Instruments (TXN), Marvel Technology (MRVL), Intel (INTC), and Microchip Technology (MCHP) are down more than -1%. 

Cryptocurrency-exposed stocks are falling today, with the price of Bitcoin (^BTCUSD) down by more than 2%.  Coinbase Global (COIN) is down more than -4%, and Strategy (MSTR) and MARA Holdings (MARA) are down more than -3%.  Also, Riot Platforms (RIOT) is down more than -2% and Galaxy Digital (GLXY) is down more than -1%.

Home builders and home building suppliers are climbing today after the 10-year T-note yield fell to a 3.5-week low of 4.00%, a supportive factor for housing demand.  Mohawk Industries (MHK), DR Horton (DHI), Builders FirstSource (BLDR), and Toll Brothers (TOL) are up more than +2%.  Also, Lennar (LEN) and PulteGroup (PHM) are up more than +1%.  

Burlington Stores (BURL) is down more than -11% after reporting Q3 revenue of $2.71 billion, below the consensus of $2.72 billion. 

Semtech (SMTC) is down more than -10% after forecasting a Q4 adjusted gross margin of 51.2%, below the 53% gross margin from Q3.   

Coherent Corp (COHR) is down more than -5% after Bain Capital cut its stake in the company for the second time this month via a $1.14 billion unregistered block trade. 

Dick’s Sporting Goods Carvana (DKS) is down more than -2% after reporting Q3 gross margin of 33.1%, below the consensus of 35.8%. 

Estee Lauder (EL) is down more than -2% after Rothschild & Co. Redburn downgraded the stock to sell from neutral with a price target of $70. 

Symbotic (SYM) is up more than +38% after reporting Q4 revenue of 618.5 million, better than the consensus of $605.1 million, and forecasting Q1 revenue of $610 million to $630 million, well above the consensus of $606.8 million.

Kohl’s (KSS) is up more than +32% after reporting Q3 met sales of $3.41 billion, better than the consensus of $3.33 billion, and raising its full year comparable sales forecast to -2.5% to -3.0% from a previous forecast of -4% to -5%, above the consensus of -4.19%.

Amentum Holdings (AMTM) is up more than +21% after reporting Q4 pro forma revenue of $3.93 billion, stronger than the consensus of $3.61 billion.

Zoom Communications (ZM) is up more than +9% after reporting Q3 revenue of $1.23 billion, above the consensus of $1.21 billion, and raising its 2026 revenue forecast to $4.85 billion-$4.86 billion from a previous estimate of $4.83 billion-$4.84 billion, better than the consensus of $4.83 billion.

Keysight Technologies (KEYS) is up more than +8% to lead gainers in the S&P 500 after reporting Q4 revenue of $1.42 billion, stronger than the consensus of $1.38 billion, and forecasting Q1 revenue of $1.53 billion to $1.55 billion, well above the consensus of $1.42 billion. 

Best Buy (BBY) is up more than +4% after reporting Q3 revenue of $9.67 billion, stronger than the consensus of $9.58 billion, and raising its 2026 revenue forecast to $41.65 billion-$41.95 billion from a previous forecast of $41.1 billion-$41.9 billion, the midpoint above the consensus of $41.77 billion. 

Alphabet (GOOGL) is up more than +2% after The Information reported that Meta Platforms is in talks to spend billions of dollars to use Google’s AI-focused chips.

Earnings Reports(11/25/2025)

Analog Devices Inc (ADI), Autodesk Inc (ADSK), Best Buy Co Inc (BBY), Burlington Stores Inc (BURL), Dell Technologies Inc (DELL), Dick's Sporting Goods Inc (DKS), HP Inc (HPQ), J M Smucker Co/The (SJM), NetApp Inc (NTAP), Nutanix Inc (NTNX), Workday Inc (WDAY), Zscaler Inc (ZS).