Stocks Settle Higher as Chip Makers and Energy Producers Rally

The S&P 500 Index ($SPX) (SPY) on Friday closed up by +0.54%, the Dow Jones Industrials Index ($DOWI) (DIA) closed up by +0.61%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed up by +0.78%.  December E-mini S&P futures (ESZ25) rose +0.50%, and December E-mini Nasdaq futures (NQZ25) rose +0.76%.

Stock indexes settled higher on Friday, with the S&P 500, the Dow Jones Industrials, and the Nasdaq 100 posting 2-week highs.  Strength in semiconductor stocks on Friday helped lift the overall market.  Also, energy producers rallied on Friday after WTI crude rose more than 1% to a 1-week high. 

Trading activity was lighter than usual on Friday after a technical outage at the Chicago Mercantile Exchange (CME) disrupted trading.  CME futures and options markets resumed trading at 8:30 AM today after being shut since Thursday evening due to a data-center fault.  According to CyrusOne, the malfunction was caused by cooling system problems at a data center in Aurora, Illinois.  Market activity on Friday was already subdued, with only half a day of trading in US equity markets after Thursday’s Thanksgiving holiday. 

Optimism about a Fed rate cut has boosted stocks this week. Market sentiment has improved this week, as bond yields have fallen amid weak US economic news and dovish Fed comments, strengthening the case for a rate cut at next month’s FOMC meeting.  The chance of a Fed rate cut at the December 9-10 FOMC meeting has risen to 83% from 30% last week.

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 are discounting an 83% 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 475 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 settled higher on Friday.  The Euro Stoxx 50 rose to a 1.5-week high and closed up +0.27%.  China’s Shanghai Composite closed up +0.34%.  Japan’s Nikkei Stock 225 closed up +0.17%.

Interest Rates

December 10-year T-notes (ZNZ5) on Friday closed down -6.5 ticks.  The 10-year T-note yield rose by +2.5 bp to 4.019%.  T-notes gave up an early advance on Friday and moved lower, and the 10-year T-note yield rebounded from a 1-month of 3.960% and moved higher, as strength in stocks undercut safe-haven demand for T-notes.  Also, Friday’s +1% rally in WTI crude oil to a 1-week high has boosted inflation expectations, a bearish factor for T-notes. 

T-notes initially moved higher on Friday due to optimism that the Fed will cut interest rates at next month’s FOMC meeting, as the chances of a 25 bp rate cut to the fed funds target range have risen to 84% from 30% last week.  Trading volume in Treasury futures was subdued as trading resumed this morning after being down since Thursday evening due to a technical outage at the CME.

European government bond yields were mixed on Friday.  The 10-year German bund yield rose by +0.9 bp to 2.689%. The 10-year UK gilt yield fell -0.9 bp to 4.440%.

Eurozone Oct 1-year inflation expectations unexpectedly increased to +2.8% from 2.7% in Sep, stronger than expectations of an easing to 2.6%.  Oct 3-year expectations remained unchanged at 2.5%, right on expectations.

German Oct retail sales unexpectedly fell -0.3% m/m, weaker than expectations of an increase of +0.2% m/m.

German Nov CPI (EU harmonized) rose +2.6% y/y, stronger than expectations of +2.4% y/y and the fastest pace of increase in 9 months.

Swaps are discounting a 3% chance for a -25 bp rate cut by the ECB at its next policy meeting on December 18.

US Stock Movers

Strength in chip makers on Friday was a supportive factor for the overall market.  Intel (INTC) closed up more than +10% to lead gainers in the S&P 500 and Nasdaq 100.  Also, Analog Devices (ADI), Micron Technology (MU), and ARM Holdings Plc (ARM) closed up more than +2%.  In addition, Microchip Technology (MCHP), ASML Holding NV (ASML), Broadcom (AVGO), Qualcomm (QCOM), GlobalFoundries (GFS), KLA Corp (KLAC), ON Semiconductor Corp (ON), Texas Instruments (TXN), and Marvell Technology (MRVL) closed up more than +1%. 

Energy producers and energy service providers moved higher on Friday after WTI crude rose more than +1% to a 1-week high.  Diamondback Energy (FANG) closed up more than +2%.  Also, Devon Energy (DVN), ConocoPhillips (COP), Halliburton (HAL), Valero Energy (VLO), Phillips 66 (PSX), Exxon Mobil (XOM), Marathon Petroleum (MPC), Chevron (CVX), and Occidental Petroleum (OXY) closed up more than +1%. 

Cryptocurrency-exposed stocks gained on Friday.  Riot Platforms (RIOT) closed up more than +8% and MARA Holdings (MARA) closed up more than +6%.  Also, Coinbase Global (COIN) closed up more than +3%, and Strategy (MSTR) and Galaxy Digital Holdings (GLXY) closed up more than +1%. 

SanDisk Corp (SNDK) closed up more than +3% after Nikkan Kogyo reported that Japan and the US are considering building a NAND flash memory plant in the US through a public partnership with Kioxia Holdings and SanDisk, seen as the main investors.

Oracle (ORCL) closed down more than -1% after Morgan Stanley warned that the company’s borrowing binge to finance its AI ambitions threatens its credit rating.

Deere & Co (DE) closed down more than -1%, adding to Wednesday’s -6% loss, after forecasting 2026 net income of $4.00 billion to $4.75 billion, well below the consensus of $5.31 billion. 

Earnings Reports(12/1/2025)

Credo Technology Group Holding (CRDO), Dakota Gold Corp (DC), Lifezone Metals Ltd (LZM), Lionsgate Studios Corp (LION), MongoDB Inc (MDB), Simulations Plus Inc (SLP), Spire Global Inc (SPIR), Triller Group Inc (ILLR), Vestis Corp (VSTS).