Market Recap: S&P 500 Edges Higher, Tech Stocks Face Pressure
- The S&P 500 concluded Thursday with a modest gain, reaching a three-week high, while the Dow Jones Industrial Average and Nasdaq 100 experienced slight declines.
- Rising bond yields, influenced by strong jobless claims data and potential Bank of Japan interest rate hikes, put pressure on the broader market.
- The tech sector was notably weak, with chip manufacturers like Intel and ON Semiconductor seeing significant drops.
- Positive corporate news provided some support, including strong performances from Dollar General, Meta Platforms, and Hormel Foods.
- Looking ahead, market focus remains on upcoming US economic data, particularly personal spending, income, and the core PCE price index.
Stock Market Performance Overview
On Thursday, major U.S. stock indices presented a mixed performance. The S&P 500 Index (^SPX) closed up by 0.11%, achieving its highest level in three weeks. Conversely, the Dow Jones Industrial Average (^DOWI) dipped by 0.07%, and the Nasdaq 100 Index (^IUXX) fell by 0.10%. December E-mini S&P futures (ESZ25) saw a slight increase of 0.08%, while December E-mini Nasdaq futures (NQZ25) declined by 0.10%.
Higher bond yields acted as a headwind for the broader market on Thursday. This pressure contributed to the Dow Jones Industrial Average and the Nasdaq 100 retreating from their three-week highs. The yield on the 10-year U.S. Treasury note climbed by 5 basis points to 4.11%. A hawkish signal for Federal Reserve policy came from the decline in initial jobless claims, which reached a three-year low, further pushing Treasury note yields upward.
💡 Understanding Bond Yields: Bond yields move inversely to bond prices. When yields rise, bond prices typically fall, and vice versa. This rise in yields can make fixed-income investments more attractive relative to stocks, potentially drawing investment away from the equity market.
Adding to the global market pressures, a Reuters report indicated that the Bank of Japan is likely to implement an interest rate hike this month, with government approval. This prospect caused Japanese Government Bond (JGB) yields to surge to an 18-year high, consequently undermining U.S. Treasury note prices. The weakness in chip manufacturers also weighed on the overall market sentiment throughout the day.
Key Economic Data and Corporate Highlights
Despite broader market pressures, several positive corporate developments provided support for stocks. Dollar General experienced a significant surge of over 14% after it raised its full-year comparable sales forecast. Meta Platforms also saw a noteworthy increase of more than 3% following CEO Mark Zuckerberg’s announcement of plans to cut the metaverse group’s budget by up to 30% next year. Additionally, Hormel Foods climbed over 3% after reporting fourth-quarter earnings per share that exceeded analyst expectations.
US Economic Indicators Shape Market Sentiment
Government data released on Thursday offered a mixed picture of the U.S. economy. Challenger job cuts in November increased by 23.5% year-over-year to 71,321. While this was a smaller increase than the anticipated 48.0%, it still represented the highest figure for November in three years.
On a more positive note, weekly initial unemployment claims unexpectedly decreased by 27,000, reaching a three-year low of 191,000. This data suggests a more robust labor market than economists had predicted, who had forecasted an increase to 220,000. This strong labor market data has hawkish implications for the Federal Reserve’s monetary policy decisions.
Separately, U.S. September factory orders saw a modest increase of 0.2% month-over-month, slightly missing the expected 0.3% rise. This indicates a slight slowdown in manufacturing demand.
📍 Economic Indicators and Fed Policy: Stronger-than-expected economic data, such as falling unemployment claims, can lead the Federal Reserve to maintain higher interest rates for longer or slow down the pace of rate cuts, as it suggests the economy can withstand restrictive monetary policy.
Federal Reserve Watch and Upcoming Data
Recent news has introduced speculation regarding future Federal Reserve leadership. President Trump indicated on Tuesday that he would announce his nominee for the new Fed Chair in early 2026. Bloomberg reported last week that National Economic Council Director Kevin Hassett is considered a likely successor to current Chair Jerome Powell. Concerns have been raised about the Fed’s independence, as Hassett has expressed support for President Trump’s approach to interest rate cuts.
Market attention this week is primarily focused on upcoming U.S. economic data. On Friday, September personal spending is projected to increase by 0.3% month-over-month, with personal income also expected to climb by 0.3%. Furthermore, the September core PCE price index, the Fed’s preferred inflation gauge, is anticipated to rise by 0.2% from the previous month and 3.2% year-over-year. Additionally, the University of Michigan’s December consumer sentiment index is forecasted to improve to 52.0, an increase of 1.0 point.
📊 Fed Rate Cut Expectations: Financial markets are currently pricing in a high probability, around 91%, of a 25 basis point interest rate cut by the Federal Reserve at its upcoming FOMC meeting on December 9-10, reflecting expectations for imminent monetary easing.
Corporate Earnings Season and International Markets
The third-quarter corporate earnings season is nearing its conclusion, with 475 out of 500 S&P companies having reported their results. A significant 83% of these companies have surpassed earnings forecasts, marking the best quarterly performance since 2021. On average, Q3 earnings have risen by 14.6% year-over-year, more than doubling the expected 7.2% increase.
Overseas stock markets also experienced mixed trading on Thursday. The Euro Stoxx 50 index reached a 2.5-week high, closing up by 0.41%. China’s Shanghai Composite Index ended the day with a slight decrease of 0.06%. In Japan, the Nikkei Stock 225 rallied to a three-week high, finishing sharply higher by 2.33%.
Interest Rate Landscape
March 10-year U.S. Treasury notes (ZNH6) saw a decline on Thursday, closing down by 12.5 ticks. The yield on the 10-year Treasury note increased by 4.3 basis points to 4.106%. Treasury note prices faced downward pressure due to negative spillover effects from a sharp plunge in Japanese 10-year JGB prices to an 18-year low, driven by increased expectations of a Bank of Japan rate hike this month.
Further losses for Treasuries occurred after U.S. weekly initial unemployment claims fell to a three-year low, signaling a robust labor market and acting as a hawkish indicator for the Federal Reserve’s policy stance. Rising inflation expectations also contributed to the pressure on Treasury notes, as the 10-year breakeven inflation rate climbed to a two-week high of 2.274%.
European government bond yields were mixed on Thursday. The 10-year German bund yield rose to a two-month high of 2.775%, closing up by 2.4 basis points at 2.771%. Conversely, the 10-year UK gilt yield declined to a one-week low of 4.417%, finishing down by 1.3 basis points at 4.435%. Eurozone October retail sales remained unchanged month-over-month, aligning with expectations.
ECB Executive Board member Cipollone commented on the economic outlook, stating, The Eurozone economy has been resilient, risks around inflation seem balanced, and our central scenario seems more and more credible. Market participants are pricing in a low probability, approximately 1%, of a rate cut by the European Central Bank at its next policy meeting on December 18.
Notable U.S. Stock Movers
Declining Stocks
The semiconductor sector faced significant headwinds on Thursday, negatively impacting the broader market. Intel (INTC) led the decliners in both the S&P 500 and Nasdaq 100, closing down over 7%. Other chipmakers also experienced notable drops, including ON Semiconductor (ON) down over 4%, and Micron Technology (MU) down over 3%.
Additional semiconductor stocks that saw declines included ASML Holding NV (ASML) and Marvell Technology (MRVL), both down over 2%. Lam Research (LRCX), GlobalFoundries (GFS), and Texas Instruments (TXN) each closed down more than 1%.
Genesco (GCO) plummeted over 30% after reporting third-quarter adjusted EPS from continuing operations of $0.79, falling short of the consensus estimate of $0.86. The company also forecast 2026 adjusted EPS from continuing operations of $0.95, significantly below the consensus of $1.55.
Symbotic (SYM) fell by more than 17% as reports emerged that an affiliate of SoftBank Group intends to sell 10 million shares of its holdings in the company. Snowflake (SNOW) dropped over 11% after forecasting a fourth-quarter adjusted operating income margin of approximately 7%, which was lower than the consensus estimate of 8.5%.
UniQure NV (QURE) closed down by more than 10% following the FDA’s indication that data from its Phase I/II studies for its Huntington’s disease gene therapy is unlikely to support a Biologics License Application submission. Kroger (KR) shares fell over 4% after reporting third-quarter sales of $33.9 billion, missing the consensus of $34.2 billion.
Lennar (LEN) experienced a decline of over 4% after JPMorgan Chase downgraded the homebuilder’s stock to underweight from neutral, setting a price target of $115. Costco Wholesale (COST) closed down over 2% after reporting November comparable sales growth of 6.9%, below the expected 7.3%. Halozyme Therapeutics (HALO) dropped more than 2% after Goldman Sachs downgraded the stock to sell from neutral with a price target of $56.
Advancing Stocks
UiPath (PATH) surged over 24% after reporting third-quarter total revenue of $411.1 million, surpassing the consensus estimate of $392.8 million. Science Applications International (SAIC) climbed more than 16% following its announcement of third-quarter adjusted EPS of $2.58, significantly exceeding the consensus of $2.08. The company also raised its full-year adjusted EPS estimate.
Dollar General (DG) led the gainers in the S&P 500, rising over 14%. The company reported third-quarter net sales of $10.65 billion, slightly better than the consensus of $10.62 billion, and increased its 2026 net sales forecast. Meta Platforms (META) advanced over 3%, topping the Nasdaq 100 gainers, after CEO Mark Zuckerberg indicated plans to reduce the metaverse division’s budget.
Salesforce (CRM) closed up over 3%, leading gains in the Dow Jones Industrials, after raising its 2026 adjusted EPS forecast above consensus expectations. Hormel Foods (HRL) also climbed over 3% after reporting fourth-quarter adjusted EPS and issuing a positive 2026 adjusted EPS forecast. Five Below (FIVE) finished the day up more than 3% after reporting strong third-quarter net sales and raising its 2026 net sales forecast above market expectations.
Upcoming Earnings Reports
On December 5, 2025, investors will be watching for earnings reports from National Beverage Corp (FIZZ) and Victoria’s Secret & Co (VSCO).
Frequently Asked Questions about U.S. Stock Market Performance
What influenced the mixed performance of major U.S. stock indices on Thursday?
The mixed performance was primarily driven by rising bond yields, which were influenced by strong U.S. jobless claims data and potential interest rate hikes from the Bank of Japan. These factors put pressure on the Dow Jones Industrial Average and Nasdaq 100, while the S&P 500 managed to edge higher.
Why did semiconductor stocks experience significant declines?
The weakness in chip manufacturers like Intel, ON Semiconductor, and Micron Technology likely stemmed from a combination of sector-specific concerns, broader market sentiment shifts, and possibly investor reactions to recent industry news or outlooks. The overall tech sector faced selling pressure.
What key economic data is investors looking for this week?
Investors are closely watching upcoming U.S. economic data, including September personal spending, personal income, and the core PCE price index, which is the Federal Reserve’s preferred inflation measure. The University of Michigan’s consumer sentiment index is also anticipated.
How is the market currently viewing the Federal Reserve’s next move?
Financial markets are anticipating a high probability of a 25 basis point rate cut by the Federal Reserve at its upcoming FOMC meeting on December 9-10. This sentiment is influenced by various economic indicators and inflation expectations.
Market Outlook and Conclusion
The U.S. stock market navigated a day of mixed signals, with the S&P 500 achieving a modest gain while interest-rate sensitive sectors faced headwinds. The specter of rising bond yields, fueled by hawkish economic data and international monetary policy shifts, continues to be a key factor influencing investor sentiment. While corporate earnings season has largely delivered positive results, the focus is increasingly shifting towards upcoming economic indicators that will provide further clarity on the inflation trajectory and the Federal Reserve’s future policy path.
The divergence in performance between different sectors highlights the nuanced investment environment. Technology stocks, particularly chipmakers, experienced selling pressure, whereas companies like Dollar General and Meta Platforms demonstrated resilience driven by specific corporate catalysts. Investors will be closely monitoring Friday’s release of personal spending, income, and core PCE data for insights into consumer behavior and inflationary pressures.
The market’s anticipation of a Federal Reserve rate cut in the near future remains a significant theme. However, any surprises in upcoming economic data, particularly on inflation, could rapidly alter these expectations. As the year progresses, the interplay between economic growth, inflation, and central bank policy will continue to be the dominant narrative shaping market movements.
