Stocks Pressured by Higher Bond Yields

The S&P 500 Index ($SPX) (SPY) today is down by -0.26%, the Dow Jones Industrials Index ($DOWI) (DIA) is down by -0.31%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down by -0.20%.  December E-mini S&P futures (ESZ25) are down -0.28%, and December E-mini Nasdaq futures (NQZ25) are down -0.20%.

Stock indexes are moving lower today, pressured by higher bond yields. The 10-year T-note yield climbed to a 2.25-month high today at 4.19% and is up +4 bp to 4.18%.  However, stocks have support on expectations that the Fed will cut interest rates following the 2-day FOMC meeting that ends on Wednesday. Market seasonals are also supportive of stocks, as December is typically a bullish month.  Strength in chip stocks today is providing a bullish backdrop to the overall market.

M&A activity and positive corporate news are also helping to push stocks higher.  Confluent is up more than +28% after IBM acquired the company for about $11 billion, including debt.  Also, Carvana is up more than +9% after S&P Dow Jones Indices said the company will replace LKQ Corp in the S&P 500 before trading begins on Monday, December 22. 

The markets this week will focus on government reports and the FOMC meeting.  On Tuesday, Oct JOLTS job openings are expected to increase by 7,150.  On Wednesday, the Q3 employment cost index is expected to climb by +0.9%.  The results of the Tue/Wed FOMC meeting are expected to show a -25 bp cut in the federal funds target range to 3.50%-3.75%.  The markets will also look to the Fed's summary of economic projections and its dot-plot interest rate forecast.  In addition, post-meeting comments from Fed Chair Powell on Wednesday about the future direction of interest rates could move the markets.  On Thursday, weekly initial unemployment claims are expected to increase by +29,000 to 220,000. 

Today’s Chinese trade report was mixed as China’s Nov exports rose +5.9% y/y, stronger than expectations of +4.0% y/y.  However, Nov imports rose by only +1.9% y/y, weaker than expectations of +3.0% y/y.

President Trump said last 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.

The markets are discounting a 93% chance of another -25 bp rate cut at the conclusion of the 2-day FOMC meeting on Wednesday.

Q3 corporate earnings season is drawing to a close as 495 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 +0.01%.  China’s Shanghai Composite rallied to a 2-week high and closed up +0.54%.  Japan’s Nikkei Stock 225 closed up +0.18%.

Interest Rates

March 10-year T-notes (ZNH6) today are down -12 ticks.  The 10-year T-note yield is up +4.5 bp to 4.18%.  Mar T-note futures slid to a 2.25-month low today, and the 10-year T-note yield rose to a 2.25-month high of 4.19%.  Supply pressures are undercutting T-note prices as the Treasury will auction $119 billion of T-notes and T-bonds this week, beginning with today’s $58 billion auction of 3-year T-notes.  Also, T-notes are weighed down by negative carryover from a fall in Japanese 10-year JGB bond prices to an 18-year low today, amid prospects for a BOJ rate hike later this month.

European government bond yields are moving higher today.  The 10-year German bund yield climbed to an 8.5-month high of 2.871% and is up by +7.2 bp to 2.870%.  The 10-year UK gilt yield rose to a 1.5-week high of 4.546% and is up by +6.8 bp to 4.545%.

The Eurozone Dec Sentix investor confidence index rose by +1.2 to -6.2, slightly stronger than expectations of -6.3. 

German Oct industrial production rose +1.8% m/m, stronger than expectations of +0.3% m/m and the biggest increase in 7 months.

ECB Executive Board member Isabel Schnabel said risks to the Eurozone economy and inflation are tilted to the upside, and she's "rather comfortable" with market expectations that the ECB's next interest rate move will be an increase.

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

Chip makers are moving higher today and are supporting gains in the broader market.  Micron Technology (MU) is up more than +3%.  Also, Broadcom (AVGO), Lam Research (LRCX), ON Semiconductor (ON), ASML Holding NV (ASML), and Microchip Technology (MCHP) are up more than +2%.  In addition, Nvidia (NVDA), Advanced Micro Devices (AMD), KLA Corp (KLAC), and NXP Semiconductors NV (NXPI) are up more than +1%. 

Marvell Technology (MRVL) is down more than -9% to lead losers in the Nasdaq 100 after Benchmark Company LLC downgraded the stock to hold from buy.

CoreWeave (CRWV) is down more than -8% after announcing it intends to offer $2 billion convertible senior notes due 2031 in a private offering.

Boston Scientific (BSX) is down more than -4% after Nephron Research downgraded the stock to hold from buy.

Rivian Automotive (RIVN) is down more than -4% after Morgan Stanley downgraded the stock to underweight from equal weight with a price target of $12. 

Range Resources (RRC) is down more than -2% after JPMorgan Chase downgraded the stock to underweight from neutral with a price target of $39. 

Lennar (LEN) is down more than -2% after Barclays downgraded the stock to underweight from equal weight with a price target of $98.

Tesla (TSLA) is down more than -2% after Morgan Stanley downgraded the stock to equal weight from overweight. 

Kymers Therapeutics (KYMR) is up more than +48% after reporting positive clinical results from its BroADen Phase 1b trial of KT-621, an oral STAT6 degrader, in patients with moderate to severe atopic dermatitis.     

Confluent (CFLT) is up more than +28% after International Business Machines acquired the company for about $11 billion, or about $31 a share. 

Carvana (CVNA) is up more than +9% after S&P Dow Jones Indices said the company will replace LKQ Corp in the S&P 500 before trading begins on Monday, December 22.   

Warner Bros Discovery (WBD) is up more than +5% to lead gainers in the Nasdaq 100 after Paramount Skydance offered $30 a share for the company, above Netflix’s offer of $27.75 a share. 

CRH Plc (CRH) is up more than +5% after S&P Dow Jones Indices said the company will replace Solstice Advanced Materials in the S&P 500 before trading begins on Monday, December 22.   

Inspire Medical Systems (INSP) is up more than +3% after Oppenheimer & Co upgraded the stock to outperform from market perform with a price target of $175.

Compass Inc (COMP) is up more than +1% after Barclays upgraded the stock to overweight from equal weight with a price target of $13. 

Earnings Reports(12/8/2025)

Barnes & Noble Education Inc (BNED), Compass Minerals International (CMP), Mama's Creations Inc (MAMA), Oil-Dri Corp of America (ODC), Ooma Inc (OOMA), Phreesia Inc (PHR), Rezolve AI PLC (RZLV), Toll Brothers Inc (TOL).