Stocks Settle Mixed on Higher Bond Yields

The S&P 500 Index ($SPX) (SPY) on Thursday closed up by +0.11%, the Dow Jones Industrials Index ($DOWI) (DIA) closed down by -0.07%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed down by -0.10%.  December E-mini S&P futures (ESZ25) rose +0.08%, and December E-mini Nasdaq futures (NQZ25) fell -0.10%.

Stock indexes settled mixed on Thursday, with the S&P 500 posting a 3-week high.  Higher bond yields on Thursday weighed on the broader market, knocking the Dow Jones Industrial Average and the Nasdaq 100 down from 3-week highs, as the 10-year T-note yield rose by +5 bp to 4.11%.  Thursday’s decline in initial jobless claims to a 3-year low was hawkish for Fed policy and pushed T-note yields higher. 

Also, a Reuters report on Thursday said the BOJ is likely to raise interest rates this month and that the government would tolerate the move, pushing Japan JGB yields to an 18-year high and undercutting T-note prices.  In addition, weakness in chip makers on Thursday weighed on the overall market.

Some positive corporate news on Thursday was supportive of stocks. Dollar General rose more than +14% after boosting its full-year comparable sales forecast.  Also, Meta Platforms rose more than +3% after CEO Zuckerberg said he plans to cut the metaverse group’s budget by up to 30% next year.  In addition, Hormel Foods rose more than +3% after reporting stronger-than-expected Q4 EPS. 

US Nov Challenger job cuts rose +23.5% y/y to 71,321, a smaller increase than expectations of +48.0% y/y but still the highest in three years for the month of November.

US weekly initial unemployment claims unexpectedly fell by -27,000 to a 3-year low of 191,000, showing a stronger labor market than expectations of an increase to 220,000.

US Sep factory orders rose +0.2% m/m, slightly weaker than expectations of +0.3% m/m.

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.  The Fed’s independence would come into question, as Hassett supports President Trump’s approach to cutting interest rates at the Fed.

Market attention this week will focus on the US economic news. 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 91% 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 Thursday.  The Euro Stoxx 50 climbed to a 2.5-week high and closed up +0.41%.  China’s Shanghai Composite closed down -0.06%.  Japan’s Nikkei Stock 225 rose to a 3-week high and closed up sharply by +2.33%.

Interest Rates

March 10-year T-notes (ZNH6) on Thursday closed down by -12.5 ticks.  The 10-year T-note yield rose by +4.3 bp to 4.106%.  T-note prices were under pressure on Thursday amid negative carryover from a plunge in Japanese 10-year JGB bond prices to an 18-year low, as prospects for a BOJ rate hike later this month improved.  T-notes added to their losses Thursday after US weekly initial unemployment claims unexpectedly fell to a 3-year low, a hawkish factor for Fed policy.  Rising inflation expectations also undercut T-note prices after the 10-year breakeven inflation rate rose to a 2-week high of 2.274% on Thursday.

European government bond yields finished mixed on Thursday.  The 10-year German bund yield climbed to a 2-month high of 2.775% and finished up by +2.4 bp to 2.771%.  The 10-year UK gilt yield fell to a 1-week low of 4.417% and finished down by -1.3 bp to 4.435%.

Eurozone Oct retail sales were unchanged m/m, right on expectations.

ECB Executive Board member Cipollone said, "The Eurozone economy has been resilient, risks around inflation seem balanced, and our central scenario seems more and more credible."

Swaps are discounting a 1% chance for a -25 bp rate cut by the ECB at its next policy meeting on December 18.

US Stock Movers

The weakness in chip makers on Thursday was a negative factor for the overall market.  Intel (INTC) closed down more than -7% to lead losers in the S&P 500 and Nasdaq 100.  Also, ON Semiconductor (ON) closed down more than -4% and Micron Technology (MU) closed down more than -3%.  In addition, ASML Holding NV (ASML) and Marvell Technology (MRVL) closed down more than -2%, and Lam Research (LRCX), GlobalFoundries (GFS), and Texas Instruments (TXN) closed down more than -1%. 

Genesco (GCO) closed down more than -30% after reporting Q3 adjusted EPS from continuing operations of 79 cents, weaker than the consensus of 86 cents, and forecasting 2026 adjusted EPS from continuing operations of 95 cents, well below the consensus of $1.55.

Symbotic (SYM) closed down more than -17% after an affiliate of SoftBank Group is said to sell 10 million shares of its Symbotic stock holdings.

Snowflake (SNOW) closed down more than -11% after forecasting Q4 adjusted operating income margin of about 7%, weaker than the consensus of 8.5%. 

UniQure NV (QURE) closed down more than -10% after announcing that the FDA indicated data from its Phase I/II studies of its AMT-130, an investigational gene therapy for Huntington’s disease, is currently unlikely to provide primary evidence to support a Biologics License Application submission. 

Kroger (KR) closed down more than -4% after reporting Q3 sales of $33.9 billion, weaker than the consensus of $34.2 billion.

Lennar (LEN) closed down more than -4% after JPMorgan Chase downgraded the stock to underweight from neutral with a price target of $115.

Costco Wholesale (COST) closed down more than -2% after reporting that Nov total comparable sales rose 6.9%, below expectations of 7.3%.

Halozyme Therapeutics (HALO) closed down more than -2% after Goldman Sachs downgraded the stock to sell from neutral with a price target of $56. 

UiPath (PATH) closed up more than +24% after reporting Q3 total revenue of $411.1 million, above the consensus of $392.8 million. 

Science Applications International (SAIC) closed up more than +16% after reporting Q3 adjusted EPS of $2.58, well above the consensus of $2.08, and raising its full-year adjusted EPS estimate to $9.80-$10.00 from a previous estimate of $9.40-$9.60. 

Dollar General (DG) closed up more than +14% to lead gainers in the S&P 500 after reporting Q3 net sales of $10.65 billion, better than the consensus of $10.62 billion, and raising its 2026 net sales forecast to +4.7% to +4.9% from a previous forecast of +4.3% to +4.8%. 

Meta Platforms (META) closed up more than +3% to lead gainers in the Nasdaq 100 after CEO Zuckerberg said he plans to cut the metaverse group’s budget by up to 30% next year.

Salesforce (CRM) closed up more than +3% to lead gainers in the Dow Jones Industrials after raising its 2026 adjusted EPS forecast to $11.75-$11.77 from a previous estimate of $11.33-$11.37, stronger than the consensus of $11.37.

Hormel Foods (HRL) closed up more than +3% after reporting Q4 adjusted EPS of 32 cents, better than the consensus of 30 cents, and forecasting 2026 adjusted EPS of $1.43 to $1.51, the midpoint above the consensus of $1.44.

Five Below (FIVE) closed up more than +3% after reporting Q4 net sales of $1.04 billion, better than the consensus of $975.3 million, and raising its 2026 net sales forecast to $4.62 billion-$4.65 billion from a previous forecast of $4.44 billion-$4.52 billion, stronger than the consensus of $4.52 billion.

Earnings Reports(12/5/2025)

National Beverage Corp (FIZZ) and Victoria's Secret & Co (VSCO).