Stocks Fall as Rising Bond Yields Spark Risk-Off Sentiment

The S&P 500 Index ($SPX) (SPY) today is down by -0.28%, the Dow Jones Industrials Index ($DOWI) (DIA) is down by -0.48%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down by -0.29%.  December E-mini S&P futures (ESZ25) are down -0.35%, and December E-mini Nasdaq futures (NQZ25) are down -0.44%.

Stock indexes are moving lower today as higher bond yields spark risk-off sentiment in asset markets.  The 10-year T-note yield is up +7 bp to 4.08% on negative carryover from a surge in 10-year Japanese bond yields to a 17-year high after Bank of Japan (BOJ) Governor Ueda offered his clearest signal yet that the BOJ could raise interest rates again at this month’s BOJ meeting.  Bitcoin is down by more than 7% today, at a 1-week low, further weighing on market sentiment.  Strength in energy producers today is a positive factor for stocks, with WTI crude up more than 1% at a 1-week high.

Today’s US economic news was bearish for stocks after the Nov ISM manufacturing index unexpectedly fell -0.5 to a 14-month low of 48.2, weaker than expectations of an increase to 49.0.  Also, the Nov ISM price paid sub-index unexpectedly rose +0.5 to 58.5, stronger than expectations of a decline to 57.5 and a sign of lingering price pressures.

Weaker-than-expected Chinese economic news was bearish for global growth prospects.  The China Nov manufacturing PMI rose +0.2 to 49.2, weaker than expectations of 49.4. Also, the Nov non-manufacturing PMI fell -0.6 to 49.5, weaker than expectations of 50.0 and the weakest report in almost three years.

The price of Bitcoin (^BTCUSD) is down more than -7% today at a 1-week low after the People’s Bank of China (PBOC) said Saturday that “risks of speculation and hype surrounding virtual currencies have resurfaced” and that virtual currencies do not have the same legal status as fiat currencies, lack legal tender status, and should not be used as currency in the market.   Bitcoin also came under pressure on comments from the CEO of Strategy, who said that his firm could sell Bitcoin if its mNaV, the ratio of enterprise value to the value of Bitcoin holdings, goes below 1x. 

Market attention this week will focus on the US economic news. On Wednesday, the Nov ADP employment change is expected to increase by +10,000.  Also, Sep manufacturing production is expected to rise by +0.1% m/m, and the Nov ISM services index is expected to fall by -0.4 to 52.0.  On Thursday, initial weekly unemployment claims are expected to rise by +6,000 to 222,000.  On Friday, Sep personal spending is expected to increase by +0.3% and Sep personal income is expected to climb +0.3% m/m.  Also on Friday, the Sep core PCE price index, the Fed’s preferred inflation measure, is expected to climb by +0.2% m/m and +2.8% y/y. Finally, the University of Michigan's Dec consumer sentiment index is expected to climb by +1.0 to 52.0.   

The markets are discounting a 100% 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 are mixed today.  The Euro Stoxx 50 is down -0.14%.  China’s Shanghai Composite climbed to a 1-week high and closed up +0.65%.  Japan’s Nikkei Stock 225 closed down -1.89%.

Interest Rates

March 10-year T-notes (ZNH6) today are down by -14 ticks.  The 10-year T-note yield is up by +7.3 bp to 4.087%.  T-notes are under pressure today from a slump in 10-year Japanese government bonds to a 17-year low after BOJ Governor Ueda signaled the BOJ could raise interest rates at his month’s policy meeting.  Also, today’s rally in WTI crude oil to a 1-week high has boosted inflation expectations, a bearish factor for T-notes.  T-notes extended their losses today after the Nov ISM price paid sub-index unexpectedly rose, a sign of lingering price pressures.

European government bond yields are moving higher today.  The 10-year German bund yield climbed to a 2-month high of 2.755% and is up by +6.1 bp to 2.749%.  The 10-year UK gilt yield is up +4.2 bp to 4.483%.

The Eurozone Nov S&P manufacturing PMI was revised downward by -0.1 to 49.6 from the previously reported 49.7, the steepest pace of contraction in 5 months.

ECB Governing Council member and Bundesbank President Nagel said, "Our projections suggest that interest rates in the Eurozone are currently in a good place."

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

Cryptocurrency-exposed stocks are under pressure today, with Bitcoin down by more than -7% at a 1-week low.  Strategy (MSTR) is down more than -10% to lead losers in the Nasdaq 100.  Also, Coinbase Global (COIN), Riot Platforms (RIOT), MARA Holdings (MARA), and Galaxy Digital Holdings (GLXY) are down more than -5%. 

Casino stocks with exposure to Macau are moving higher today after Macau's Nov gaming revenue rose +14.4% y/y.  Wynn Resorts Ltd (WYNN) is up more than +4%, Melco Resorts & Entertainment Ltd (MLCO) is up more than +3%, and Las Vegas Sands (LVS) is up more than +2%.

Energy producers and energy service providers are climbing today as the price of WTI crude rose to a 1-week high.  Diamondback Energy (FANG) is up more than +3%.  Also, Devon Energy (DVN), ConocoPhillips (COP), Halliburton (HAL), and Phillips 66 (PSX) are up more than +2%.  In addition, Marathon Petroleum (MPC), Chevron (CVX), Occidental Petroleum (OXY), and Valero Energy (VLO) are up more than +1%.

Sionna Therapeutics (SION) is down more than -17% after RBC Capital Markets downgraded the stock to underperform from sector perform with a price target of $24.

Joby Aviation (JOBY) is down more than -6% after Goldman Sachs initiated coverage on the stock with a recommendation of sell and a price target of $10.

Moderna (MRNA) is down more than -5% to lead vaccine makers lower after William Blair flagged a report from the FDA that links Covid-19 vaccines in younger people to deaths associated with myocarditis. 

Coupang (CPNG) is down more than -5% as the company faces an investigation from South Korean authorities over a data breach that affected about 33.7 million customer accounts. 

Zscaler (ZS) is down more than -2% after Bernstein downgraded the stock to market perform from outperform.

Shopify (SHOP) is down more than -2% after Oppenheimer said the pace of spending at the e-commerce firm moderated through Sunday during the Black Friday promotional period.

Leggett & Platt (LEG) is up more than +13% after Somnigroup International proposed to acquire all outstanding shares of the company for $12 per share. 

Chime Financial (CHYM) is up more than +6% after Goldman Sachs upgraded the stock to buy from neutral with a price target of $27.

Old Dominion Freight Line (ODFL) is up more than +5% to lead gainers in the S&P 500 and Nasdaq 100 after BMO Capital Markets upgraded the stock to outperform from market perform with a price target of $170.

Synopsys (SNPS) is up more than +3% after Nvidia said it invested $2 billion in the company after announcing a multi-year strategic partnership with the company.

Walt Disney (DIS) is up more than +1% to lead gainers in the Dow Jones Industrials after its Zootopia 2 movie pulled in $272 million in China over the weekend, the second-biggest opening ever for a foreign film.

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).