Stocks Settle Higher on Strength in Chip Makers and Boeing

The S&P 500 Index ($SPX) (SPY) on Tuesday closed up by +0.25%, the Dow Jones Industrials Index ($DOWI) (DIA) closed up by +0.39%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed up by +0.84%.  December E-mini S&P futures (ESZ25) rose +0.21%, and December E-mini Nasdaq futures (NQZ25) rose +0.82%.

Stock indexes rallied on Tuesday, with the S&P 500 and Nasdaq 100 posting 2.5-week highs.  Strength in chip stocks supported gains in the broader market on Tuesday.  Also, some better-than-expected earnings results boosted technology stocks.  MongoDB surged more than +22% after reporting stronger-than-expected Q3 EPS, and Credo Technology Group Holding rose more than +10% after reporting stronger-than-expected Q2 revenue.  In addition, Boeing jumped more than +10% after CFO Malave said he expects positive free cash flow to reach the ”low-single digits” next year.

The Organization for Economic Co-operation and Development (OECD) kept its global 2025 GDP forecast unchanged at +3.2%, but raised its US 2025 GDP forecast to +2.0% from a previous estimate of +1.8%, and its Eurozone 2025 GDP forecast to +1.3% from +1.2%.  The OECD said the global economy is weathering trade tariffs better than expected due to strong investment in artificial intelligence and supportive fiscal and monetary policies.

President Trump said on Tuesday that he will announce his selection for the new Fed Chair in early 2026.  Bloomberg reported last week that National Economic Council Director Kevin Hassett is seen as the likely choice to succeed Powell.  Fed independence would come into question, as Hassett supports President Trump’s approach to cutting interest rates at the Fed, which Trump has long sought to control.

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 98% 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 mixed on Tuesday.  The Euro Stoxx 50 climbed to a 2-week high and closed up +0.33%.  China’s Shanghai Composite closed down -0.42%.  Japan’s Nikkei Stock 225 closed unchanged.

Interest Rates

March 10-year T-notes (ZNH6) on Tuesday closed up +2 ticks.  The 10-year T-note yield fell -0.2 bp at 4.085%.  March T-notes recovered from a 1.5-week low on Tuesday, and the 10-year T-note yield fell from a 1.5-week high of 4.114%. 

T-notes recovered from early losses on Tuesday and turned higher after WTI crude oil prices fell more than -1%, weighing on inflation expectations. T-notes also have support due to expectations that the Fed will cut interest rates at next week’s FOMC meeting, as the chances of a rate cut increased to 98% from 30% last week, according to swaps markets. 

European government bond yields moved lower on Tuesday.  The 10-year German bund yield fell from a 2-month high of 2.767% and finished down by -0.2 bp to 2.749%.  The 10-year UK gilt yield fell -1.2 bp to 4.469%.

Eurozone Nov CPI rose +2,2% y/y, stronger than expectations of +2.1% y/y.  Nov core CPI was unchanged from Oct at +2.4% y/y, right on expectations.

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

Strength in semiconductor stocks was a supportive factor for the overall market on Tuesday.  Intel (INTC) closed up more than +9% to lead gainers in the Nasdaq 100, and NXP Semiconductors NV (NXPI) closed up more than +8%.  Also, Microchip Technology (MCHP) closed up more than +7%, and Applied Materials (AMAT) and Texas Instruments (TXN) closed up more than +4%.  In addition, GlobalFoundries (GFS) and KLA Corp (KLAC) closed up more than +3%, and Analog Devices (ADI), ON Semiconductor (ON), Lam Research (LRCX), ASML Holding NV (ASML), and Marvell Technology (MRVL), closed up more than +2%. 

Cryptocurrency-exposed stocks rallied today after Bitcoin (^BTCUSD) rose more than +5%.  Strategy (MSTR) closed up more than +5%, MARA Holdings (MARA) and Galaxy Digital Holdings (GLXY) closed up more than +2%, and Coinbase Global (COIN) closed up more than +1%. 

Defensive food stocks retreated on Tuesday amid strength in the overall market.  General Mills (GIS), Conagra Brands (CAG), Campbell’s Company (CPB), and J M Smucker (SJM) closed down more than -2%.  Also, Tyson Foods (TSN), Kraft Heinz Co (KHC), McCormick & Co (MKC), and Hershey Co (HSY) closed down more than -1%.   

MongoDB (MDB) closed up more than +22% after reporting Q3 revenue of $628.3 million, well above the consensus of $594.8 million, and raising its 2026 revenue forecast to $2.43 billion-$2.44 billion from a previous forecast of $2.34 billion-$2.36 billion, stronger than the consensus of $2.36 billion.

Boeing (BA) closed up more than +10% to lead gainers in the S&P 500 and Dow Jones Industrials after CFO Malave said he expects the company to generate low-single-digit positive free cash flow in 2026. 

Credo Technology Group Holding Ltd (CRDO) closed up more than +10% after reporting Q2 adjusted EPS of 67 cents, stronger than the consensus of 49 cents. 

Teradyne (TER) closed up more than +5% after Stifel upgraded the stock to buy from hold with a price target of $225.

Cloudflare (NET) closed up more than +2% after Barclays initiated coverage on the stock with a recommendation of overweight and a price target of $235.

Six Flags Entertainment (FUN) closed up more than +1% after Truist Securities upgraded the stock to buy from hold with a price target of $23.

Dexcom (DXCM) closed up more than +1% after Morgan Stanley upgraded the stock to overweight from equal weight with a price target of $75.

Symbotic (SYM) closed down more than -21% after Goldman Sachs downgraded the stock to sell from neutral with a price target of $47. 

Block (XYZ) closed down more than -6% to lead losers in the S&P 500 after the company flagged weakness in gross payment volume for its Square segment in Q4.

Packaging Corp of America (PKG) closed down more than 5% after Bloomberg Intelligence reported that surveyed managers said box demand may rise only 1.3% in December from a year earlier, down from a September forecast of 1.6% and the third month in a row that sentiment has declined from initial expectations.

Maplebear (CART) closed down more than -2% after The Information reported that Amazon.com is planning a new ultrafast delivery offering for groceries in major urban areas of the US.

Procter & Gamble (PG) closed down more than -1% after CFO Schulten said US consumer weakness is likely to hit the company’s bottom line in the current quarter.

Earnings Reports(12/3/2025)

Dollar Tree Inc (DLTR), Five Below Inc (FIVE), Guidewire Software Inc (GWRE), Macy's Inc (M), nCino Inc (NCNO), PVH Corp (PVH), Salesforce Inc (CRM), Snowflake Inc (SNOW), Thor Industries Inc (THO), UiPath Inc (PATH).