Stocks Mixed with Energy Producers Higher and Homebuilders Lower

The S&P 500 Index ($SPX) (SPY) today is down by -0.05%, the Dow Jones Industrials Index ($DOWI) (DIA) is up by +0.43%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down by -0.33%.  December E-mini S&P futures (ESZ25) are down -0.06%, and December E-mini Nasdaq futures (NQZ25) are down -0.26%.

Stock indexes are mixed today.  Energy producers are climbing today after WTI crude oil rose more than +1% after President Trump announced an oil blockade on tankers going into and leaving Venezuela.  Mining stocks are also moving higher as tensions in Venezuela escalate, boosting safe-haven demand for precious metals, with silver soaring to a new all-time high. 

On the negative side, homebuilding stocks are lower, led by a -3% fall in Lennar after it reported Q4 EPS that were weaker than expected. Also, bond yields are higher, with the 10-year T-note yield up +2 bp to 4.17% due to negative carryover from a surge in Japan’s 10-year bond yield to an 18-year high of 1.98% on fiscal concerns after Kyodo reported that the Japanese government is considering a record budget of over 120 trillion yen ($775 billion) for fiscal 2026.

Dovish comments today from Fed Governor Christopher Waller were supportive of stocks and bonds, as he said the US labor market is "pretty soft" with close to zero job growth and that inflation is pretty well anchored around 2%. He added that interest rates are still 50-100 basis points above neutral, and the Fed can steadily lower them with no rush.

US MBA weekly mortgage applications fell -3.8% in the week ended December 12, with the purchase mortgage sub-index down -2.8% and the refinancing mortgage sub-index down -3.6%.  The average 30-year fixed rate mortgage rose +5 bp to 6.38% from 6.33% in the prior week.

This week's market focus will be on US economic news.  On Thursday, weekly initial unemployment claims are expected to fall -11,000 to 225,000.  Also, Nov CPI is expected to be +3.1% y/y, and Nov core CPI is expected to be +3.0% y/y.  On Friday, Nov existing home sales are expected to be up +1.2% m/m to 4.15 million. Also, the University of Michigan Dec consumer sentiment index is expected to be revised upward by +0.2 to 53.5 from the previously reported 53.3.

The markets are discounting a 24% chance that the FOMC will cut the fed funds target range by 25 bp at the next FOMC meeting on January 27-28.

Overseas stock markets are mixed today.  The Euro Stoxx 50 is down -0.21%.  China’s Shanghai Composite closed up +1.19%.  Japan’s Nikkei Stock 225 recovered from a 2-week low and closed up +0.26%.

Interest Rates

March 10-year T-notes (ZNH6) today are down by -4 ticks.  The 10-year T-note yield is up 2.0 bp to 4.165%.  T-notes are sliding today on negative carryover from a plunge in Japanese 10-year bonds to an 18-year low.  Also, strength in stocks today has reduced safe-haven demand for T-notes.  In addition, supply pressures are weighing on T-note prices ahead of the Treasury’s $13 billion auction of 20-year T-bonds later today. T-notes recovered from their worst levels on dovish comments from Fed Governor Waller, who said interest rates were still 50-100 bp above neutral. 

The steepening yield curve is bearish for T-note prices. Steepening trades occur when bond investors buy short-term government debt and sell long -term debt.  The yield curve has steepened since last Wednesday’s FOMC meeting, when the Fed said it would begin purchasing up to $40 billion of short-term T-bills a month to boost liquidity in the financial system. Longer-term Treasury securities are also under pressure from concerns about inflation and the Fed’s independence. 

European government bond yields are mixed today.  The 10-year German bund yield rebounded from a 1-week low of 2.826% and is up +1.3 bp to 2.858%.  The 10-year UK gilt yield fell to a 1.5-week low of 4.446% and is down -4.9 bp to 4.469%.

Eurozone Nov CPI was revised downward to +2.1% y/y from the previously reported +2.2% y/y.

Eurozone Q3 labor costs eased to +3.3% y/y from +3.9% y/y in Q2, the smallest pace of increase in three years.

The German Dec IFO business conditions survey unexpectedly fell -0.4 to a 7-month low of 87.6 versus expectations of an increase to 88.2.

UK Nov CPI eased to +3.2% y/y from +3.6% y/y in Oct, better than expectations of +3.5% y/y and the slowest pace of increase in eight months.  Nov core CPI rose +3.2% y/y, weaker than expectations of +3.4% y/y and the slowest pace of increase in 11 months.

Swaps are discounting a 0% chance for a -25 bp rate cut by the ECB at its next policy meeting on Thursday.

US Stock Movers

Energy producers and energy service providers are climbing today, with the price of WTI crude oil up by more than 1%.  Devon Energy (DVN) is up more than +2%.  Also, APA Corp (APA), ConocoPhillips (COP), Halliburton (HAL), Occidental Petroleum (OXY), Diamondback Energy (FANG), and Chevron (CVX) are up more than +1%. 

Homebuilding stocks are lower today, led by a -3% fall in Lennar (LEN) after it forecast Q1 new orders of 18,000 to 19,000, below the consensus of 20,297.  Also, DR Horton (DHI), PulteGroup (PHM), and Toll Brothers (TOL) are down more than -1%.

Jabil Inc (JBL) is up more than +6% to lead gainers in the S&P 500 after reporting Q1 net revenue of $8.31 billion, better than the consensus of $8.04 billion, and raising its 2026 net revenue estimate to $32.4 billion from a previous estimate of $31.3 billion, above the consensus of $31.52 billion.

Albemarle (ALB) is up more than +4% to lead lithium producers higher as lithium prices continue to rise with expected demand growth.

Lumentum Holdings (LITE) is up more than +4% after Morgan Stanley raised its price target on the stock to $304 from $190. 

Coherent Corp (COHR) is up more than +4% after Morgan Stanley raised its price target on the stock to $180 from $150.

Texas Pacific Land Corp (TPL) is up more than +3% after announcing a strategic agreement with Bolt Data & Energy to develop large-scale data center campuses across TPL’s West Texas land holdings. 

Netflix (NFLX) is up more than +2% as Warner Bros. Discovery plans to reject Paramount Skydance’s takeover bid due to concerns about financing and other terms. 

Bally’s Corp (BALY) is down more than -8% after Barclays downgraded the stock to underweight from equal weight with a price target of $11.

Paramount Skydance (PSKY) is down more than -4% to lead losers in the S&P 500 as Warner Bros. Discovery plans to reject Paramount Skydance’s takeover bid due to concerns about financing and other terms. 

Progressive Corp (PGR) is down more than 3% after reporting that November net premiums written fell 12% m/m.

Oracle (ORCL) is down more than -3% after the Financial Times reported that Blue Owl Capital will not back a $10 billion deal for Oracle’s next data center. 

Worthington Enterprises (WOR) is down more than -3% after reporting Q2 adjusted EPS of 65 cents, weaker than the consensus of 70 cents. 

Brown-Forman Corp (BF.B) is down more than -3% after Citigroup downgraded the stock to sell from neutral with a price target of $27.

Fortinet (FTNT) is down more than -1% after JPMorgan Chase downgraded the stock to underweight from neutral with a price target of $75.

Earnings Reports(12/17/2025)

General Mills Inc (GIS), Jabil Inc (JBL), Micron Technology Inc (MU), Toro Co/The (TTC).