Stocks Pressured by Higher Bond Yields

The S&P 500 Index ($SPX) (SPY) today is up by +0.01%, the Dow Jones Industrials Index ($DOWI) (DIA) is up by +0.03%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down by -0.26%.  December E-mini S&P futures (ESZ25) are up +0.01%, and December E-mini Nasdaq futures (NQZ25) are down -0.27%.

Stock indexes are mixed today amid rising global bond yields. The 10-year T-note yield rose to a 3-month high of 4.21% and the 10-year German bund yield climbed to an 8.75-month high of 2.90%.  The markets are concerned that the FOMC will make a hawkish rate cut at the conclusion of today’s 2-day FOMC meeting, where they cut interest rates by -25 bp but signal a “long hold” in rates thereafter.  Recent US economic news has shown the economy cooling while inflation remains above target, which may prompt the Fed to delay further rate cuts.

Stock losses are limited amid signs of easing wage pressures, which are dovish for Fed policy, after the US Q3 employment cost index rose by +0.8% q/q, slightly weaker than expectations of +0.9% q/q.

US MBA mortgage applications rose +4.8% in the week ended December 5, with the purchase mortgage sub-index down -2.4% and the refinancing mortgage sub-index up +14.3%.  The average 30-year fixed rate mortgage rose +1 bp to 6.33% from 6.32% in the prior week.

The markets this week will focus on government reports and the FOMC meeting.  Later today, the FOMC meeting is expected to cut the federal funds target range by -25 bp to 3.50%-3.75%.  The markets will also look at the Fed's summary of economic projections and its dot-plot interest rate forecast.  In addition, post-meeting comments from Fed Chair Powell 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. 

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

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 lower today.  The Euro Stoxx 50 is down -0.27%.  China’s Shanghai Composite closed down -0.23%.  Japan’s Nikkei Stock 225 fell from a 3.5-week high and closed down -0.10%.

Interest Rates

March 10-year T-notes (ZNH6) today are down -2 ticks.  The 10-year T-note yield is up +0.4 bp to 4.192%.  Mar T-note futures fell to a 3-month low today, and the 10-year T-note yield rose to a 3-month high of 4.207%.  T-notes are under pressure amid concerns that a divided FOMC will signal a hawkish rate cut today, cutting rates by -25 bp but then signaling policy will remain on hold for an extended period.  T-notes also saw some negative carryover from hawkish ECB comments today, which pushed the German 10-year bund yield to an 8.75-month high.  However, T-notes recovered from their worst level after the US Q3 employment index rose less than expected, a dovish factor for Fed policy.

European government bond yields are moving higher today.  The 10-year German bund yield climbed to an 8.75-month high of 2.895% and is up by +1.8 bp to 2.868%.  The 10-year UK gilt yield rose to a 2.5-week high of 4.554% and is up by +1.9 bp to 4.524%.

ECB President Lagarde said the ECB will likely raise its economic growth forecasts at next week's policy meeting, reflecting a more optimistic outlook. 

ECB Governing Council member Simkus said, "We have an inflation rate that is more or less close to the 2% target in the medium term, which suggests no need for a change in interest rates, not only at the next ECB meeting in December but also in further meetings."

Swaps are discounting a 0% 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 (^BTCUSD) down nearly -1%.  Strategy (MSTR), Galaxy Digital Holdings (GLXY), and MARA Holdings (MARA) are down more than -2%. Also, Riot Platforms (RIOT) and Coinbase Global (COIN) are down more than -1%. 

AeroVironment (AVAV) is down more than -7% after cutting its 2026 adjusted EPS forecast to $3.40-$3.55 from a previous forecast of $3.60-$3.70, below the consensus of $3.63. 

T Rowe Price Group (TROW) is down more than -3% to lead losers in the S&P 500 after reporting assets under management in Nov fell -0.2% m/m to $1.79 trillion. 

Cracker Barrel Old Country Store (CBRL) is down more than -3% after cutting its full-year sales forecast to $3.2 billion-$3.3 billion from a previous forecast of $3.35 billion-$3.45 billion, weaker than the consensus of $3.38 billion. 

Biogen (BIIB) is down more than -3% after HBSC downgraded the stock to reduce from hold with a price target of $143. 

GameStop (GME) is down more than -3% after reporting Q3 net sales fell -4.6% y/y to $821.0 million. 

Noble Corp Plc (NE) is down more than -2% after JPMorgan Chase downgraded the stock to neutral from overweight.

Photronics (PLAB) is up more than +44% after reporting Q4 adjusted EPS of 60 cents, well above the consensus of 45 cents, and forecasting Q1 adjusted EPS of 51 cents to 59 cents, better than the consensus of 46 cents.

GE Vernova (GEV) is up more than +13% to lead gainers in the S&P 500 after boosting its stock buyback program to $10 billion and doubling its quarterly dividend to 50 cents. 

EchoStar (SATS) is up more than +5% after Morgan Stanley upgraded the stock to overweight from equal weight with a price target of $110. 

Middleby Corp. (MIDD) is up more than +4% after Jeffries upgraded the stock to buy from hold with a price target of $175.

Chewy (CHWY) is up more than +3% after reporting Q3 net sales of $3.12 billion, better than the consensus of $3.10 billion. 

PepsiCo (PEP) is up more than +2% after JPMorgan Chase upgraded the stock to overweight from neutral with a price target of $164.

Waters Corp. (WAT) is up more than +1% after Wolfe Research upgraded the stock to outperform from peer perform with a price target of $480. 

Earnings Reports(12/10/2025)

Adobe Inc (ADBE), Chewy Inc (CHWY), Nordson Corp (NDSN), Oracle Corp (ORCL), Synopsys Inc (SNPS), Vail Resorts Inc (MTN).