At a Glance
- Major US stock indexes, including the S&P 500, Dow Jones Industrials, and Nasdaq 100, experienced declines on Monday.
- Market sentiment was shaped by anticipation of key economic reports and Nvidia’s upcoming earnings, alongside a significant investment in Alphabet by Berkshire Hathaway.
- A packed economic calendar this week includes numerous delayed reports, offering insights into employment, manufacturing, housing, and consumer sentiment.
- Stronger-than-expected manufacturing data for November provided a mixed signal, influencing expectations for Federal Reserve policy.
- Positive Q3 earnings season results, with a high percentage of S&P 500 companies exceeding forecasts, provided some underlying support.
Market Overview and Economic Drivers
US stock indexes saw a downturn on Monday, influenced by the impending release of delayed economic data and Nvidia’s earnings report, scheduled for Wednesday. The market found some support from a notable jump in Alphabet’s stock, driven by Berkshire Hathaway’s disclosure of a $4.9 billion stake in the company.
Investors are keenly awaiting Nvidia’s earnings after the market close on Wednesday, seeking further clarity on the artificial intelligence (AI) sector’s outlook. Additionally, earnings reports from major retailers like Walmart, Target, and Home Depot will be crucial in assessing the health of consumer spending.
Anticipated Economic Data and Federal Reserve Outlook
This week’s economic schedule is exceptionally dense, featuring a large volume of previously delayed U.S. economic reports. On Tuesday, attention will be on the ADP weekly employment report, the NY Fed’s US business leaders survey, industrial production, the November NAHB housing index, August factory orders, and August durable goods orders.
Wednesday’s data includes MBA weekly mortgage applications, the August trade balance, and the October FOMC meeting minutes. Thursday’s releases comprise weekly unemployment claims, the September unemployment report, the Philadelphia Fed report, October existing home sales, and the Kansas City Fed manufacturing survey. Friday will bring real earnings data, S&P US manufacturing and services PMI reports, the University of Michigan’s US consumer sentiment index, and the Kansas City Fed’s services activity report. Other delayed US economic reports are also expected, though their specific release dates are not yet confirmed.
💡 Monday’s economic news provided a positive catalyst for stocks, as the November Empire manufacturing general business conditions survey unexpectedly surged by 8.0 points to 18.7 – a one-year high, surpassing the expected decline to 5.8.
The market is currently pricing in a 41% probability of a 25 basis point interest rate cut at the upcoming FOMC meeting on December 9-10.
✅ On a positive note for equities, Federal Reserve Governor Christopher Waller reiterated his call for a December rate cut, citing his belief that the US labor market is nearing stall speed. Mr. Waller, known for his dovish stance, is reportedly being considered by President Trump as a potential successor to Jerome Powell as Fed Chair, whose term concludes in May 2026.
Corporate Earnings and International Markets
The third-quarter corporate earnings season is nearing its conclusion, with 460 out of the 500 S&P companies having reported their results. According to Bloomberg Intelligence, 82% of these reporting S&P 500 companies have surpassed earnings forecasts, marking the strongest quarter since 2021, with Q3 earnings showing a year-over-year increase of 14.6%, more than doubling the expected 7.2% growth.
Overseas stock markets closed lower on Monday. The Euro Stoxx 50 index fell by 0.93%. China’s Shanghai Composite dropped to a 1.5-week low, closing down 0.46%, while Japan’s Nikkei Stock 225 declined to a one-week low, ending the day down 0.10%.
Interest Rates and European Markets
Interest Rates
December 10-year T-notes saw a modest increase of +3 ticks, with the 10-year T-note yield decreasing by 1.6 basis points to 4.133%. T-note prices experienced a slight uplift on speculation that the delayed US economic data releases this week would indicate economic weakness and easing inflationary pressures, potentially leading the Federal Reserve to continue with interest rate cuts. However, T-notes were partially constrained by the unexpectedly strong November Empire manufacturing index, which rose to a one-year high, a hawkish signal for Fed policy.
European government bond yields moved lower on Monday. The 10-year German bund yield dropped 0.7 basis points to 2.712%. The 10-year UK gilt yield approached a one-month high but ultimately closed down 3.9 basis points at 4.535%.
📈 The European Commission revised its 2025 Eurozone GDP forecast upward to +1.3% from its previous May projection of +0.9%. The forecast for 2025 Eurozone inflation remained unchanged from May at +2.1%.
ECB Vice President Luis de Guindos commented that financial stability risks remain elevated in view of uncertainty over geoeconomic trends and the ultimate impact of tariffs in a volatile international environment.
Market swaps indicate a 2% probability of a 25 basis point rate cut by the European Central Bank (ECB) at its next policy meeting on December 18.
US Stock Movers
US Stock Movers
Alphabet (GOOGL) led the Nasdaq 100 gainers, rising over 3% following Berkshire Hathaway’s announcement of its $4.9 billion investment in the company. Tesla (TSLA) also saw an increase of more than 1%. In contrast, other Magnificent Seven stocks experienced declines, with Nvidia (NVDA), Apple (AAPL), and Meta (META) each falling by more than 1%.
Amazon.com (AMZN) decreased by 0.8% after Bloomberg reported the company is planning to raise $12 billion from its first US bond sale in three years, signaling an intention to boost spending in areas such as AI.
Chip stocks largely finished lower on Monday. Micron Technology (MU) initially rose over 4% after Rosenblatt Securities raised its price target to $300 from $250, but it reversed these gains to end the day down nearly 2%. Qualcomm (QCOM) closed down more than 4%. Marvell Technology (MRVL), NXP Semiconductors (NXPI), Microchip Technology (MCHP), and Align Technology (ALGN) all recorded losses exceeding 3%.
Crypto stocks declined, mirroring a broader market trend and Bitcoin’s (^BTCUSD) drop of 3.5% to a new 7-month low. Coinbase (COIN) fell over 7%, and Galaxy Digital Holdings (GLXY) was down nearly 5%.
Zymeworks (ZYME) surged 29%, and Jazz Pharmaceuticals (JAZZ) gained 21% after their collaborative experimental combination therapy for stomach and esophageal cancer showed positive topline results from a late-stage trial.
Rubrik (RBRK) fell 2.6%, despite Mizuho Securities upgrading the stock to outperform from neutral with a price target of $97.
Gap (GAP) dropped 1.6%, even as Barclays upgraded the stock to overweight from equal weight, setting a price target of $30.
Expeditors International of Washington (EXPD) rose 2.8% after UBS upgraded the stock to buy from neutral, with a price target of $166.
Aramark (ARMK) fell more than 5% after reporting Q4 revenue of $5.05 billion, which was below the consensus estimate of $5.17 billion.
Dell Technologies (DELL) tumbled over 8%, leading the S&P 500 losers, after Morgan Stanley downgraded the stock to underweight from overweight, with a price target of $110.
HP Enterprise (HPE) fell 7% after Morgan Stanley downgraded the stock to equal weight from overweight.
Sealed Air Corp (SEE) declined more than 3% following a downgrade to hold from buy by Stifel.
HP Inc (HPQ) dropped more than 6% after Morgan Stanley downgraded the stock to underweight from equal weight, with a price target of $24.
Expert Summary
US stock indexes experienced a notable decline on Monday, driven by investor caution ahead of key economic data and Nvidia’s upcoming earnings report. Despite a strong Q3 earnings season and positive stock movements in some large-cap companies like Alphabet, broader market sentiment was weighed down by ongoing economic uncertainties and mixed sector performance. The upcoming deluge of economic reports and corporate earnings will be critical in shaping market direction in the near term.
