The S&P 500 Index ($SPX) (SPY) today is up by +0.18%, the Dow Jones Industrials Index ($DOWI) (DIA) is up by +0.47%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down by -0.06%.  December E-mini S&P futures (ESZ25) are up +0.16%, and December E-mini Nasdaq futures (NQZ25) are down -0.08%.

Stock indexes shook off early losses and traded mixed as bond yields fell on expectations that today’s weaker-than-expected Nov ADP employment report will prompt the Fed to lower interest rates at next week’s FOMC meeting. The 10-year T-note yield is down -2 bp to 4.07%.

Stocks are being underpinned by strength in chipmakers. Microchip Technology is up more than +7% after forecasting stronger-than-expected Q3 adjusted EPS. Marvell Technology is up more than +3% after reporting better-than-expected Q3 revenue.

Stocks initially moved lower today as signs of weakness in the US labor market have stoked economic concerns.  Today’s US Nov ADP employment report showed that employers unexpectedly cut jobs by the most in more than 2.5 years.  However, stocks recovered after the Nov ISM services report showed that US service-sector activity unexpectedly expanded by the most in 9 months, and price pressures in the service sector eased.

AI demand concerns are another negative for stocks after “The Information” news service reported that Microsoft is reducing its AI software sales quotas amid consumer resistance to newer products. 

US MBA mortgage applications fell -1.4% in the week ended November 28, with the purchase mortgage sub-index up +2.5% and the refinancing mortgage sub-index down -4.4%.  The average 30-year fixed rate mortgage fell -8 bp to 6.32% from 6.40% in the prior week.

The US Nov ADP employment change unexpectedly fell by -32,000, signaling a weaker labor market than expected, with the biggest decline in more than 2.5 years.

US Sep manufacturing production was unchanged m/m, right on expectations.

The US Nov ISM services index unexpectedly rose +0.3 to 52.6, stronger than expectations of a decline to 52.0 and the strongest pace of expansion in 9 months.  Service price pressures also eased after the Nov ISM price paid sub-index fell -4.6 to 65.4, weaker than expectations of 68.0 and the slowest pace of increase in seven months.

President Trump said on 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.  Fed independence would come into question, as Hassett supports President Trump’s approach to cutting interest rates at the Fed.

Market attention this week will focus on the US economic news. On Thursday, initial weekly unemployment claims are expected to rise by +4,000 to 220,000.  On Friday, Sep personal spending is expected to increase by +0.3% and Sep personal income is expected to climb +0.3% m/m.  Also on Friday, the Sep core PCE price index, the Fed’s preferred inflation measure, is expected to climb by +0.2% m/m and +2.8% y/y. Finally, the University of Michigan's Dec consumer sentiment index is expected to climb by +1.0 to 52.0.   

The markets are discounting a 98% chance of another -25 bp rate cut at the next FOMC meeting on December 9-10.

Q3 corporate earnings season is drawing to a close as 475 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 mixed today.  The Euro Stoxx 50 rose to a 2.5-week high and is up +0.18%.  China’s Shanghai Composite closed down -0.51%.  Japan’s Nikkei Stock 225 closed up +1.14%.

Interest Rates

March 10-year T-notes (ZNH6) today are up +2 ticks.  The 10-year T-note yield is down -0.8 bp at 4.079%.  T-note prices are climbing today after the Nov ADP employment report showed US employers unexpectedly shed jobs, a sign of labor market weakness and a dovish factor for Fed policy.  T-notes also have support due to expectations that the Fed will cut interest rates at next week’s FOMC meeting, as the chances of a rate cut increased to 98% from 30% last week, according to swaps markets.  T-note prices fell back from their best level after the Nov ISM services index unexpectedly rose to a 9-month high.

European government bond yields are moving lower today.  The 10-year German bund yield is down by -0.1 bp to 2.748%. The 10-year UK gilt yield is down -2.9 bp to 4.440%.

Eurozone Oct PPI rose +0.1% m/m and fell -0.5% y/y, right on expectations.

The Eurozone Nov S&P composite PMI was revised upward by +0.4 to 52.8 from the previously reported 52.4, the strongest pace of expansion in 2.5 years.

The UK Nov S&P composite PMI was revised upward by +0.7 to 51.2 from the previously reported 50.5.

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 climbing today, led by a +7% jump in Microchip Technology (MCHP) after forecasting Q3 adjusted EPS of 40 cents, above the consensus of 37 cents.  Also, ON Semiconductor (ON) is up more than +6% and Marvell Technology (MRVL) is up more than +4% after reporting Q3 net revenue of $2.08 billion, better than the consensus of $2.06 billion. In addition, NXP Semiconductors NV (NXPI) is up more than +3%, and Advanced Micro Devices (AMD), ASML Holding NV (ASML), and Texas Instruments (TXN) are up more than +1%. 

Cryptocurrency-exposed stocks are moving higher today, with Bitcoin (^BTCUSD) up more than +1% at a 2-week high.  Coinbase Global (COIN) is up more than +3% and Galaxy Digital Holdings (GLXY) is up more than +2%. Also, MARA Holdings (MARA) is up +0.55% and Strategy (MSTR) is up +0.28%.

Homebuilders and building suppliers are climbing today as the weaker-than-expected Nov ADP employment report bolsters the chance for a Fed rate cut at next week’s FOMC meeting, a supportive factor for housing demand.  Builders FirstSource (BLDR) and DR Horton (DHI) are up more than +2%.  Also, Lennar (LEN), Toll Brothers (TOL), and PulteGroup (PHM) are up more than +1%. 

Pharvaris NV (PHVS) is up more than +16% after it said a late-stage trial of its investigative therapy to treat hereditary angioedema met its primary goal. 

American Eagle Outfitters (AEO) is up more than +14% after reporting Q3 net revenue of $1.36 billion, better than the consensus of $1.32 billion, and raising its 2026 comparable sales growth forecast to the low single digits from a previous estimate of flat.

Fiserv Inc (FISV) is up more than +5% on signs of insider buying after an SEC filing showed CFO Todd bought $1.06 million of shares on Monday. 

Vertex Pharmaceuticals (VRTX) is up more than +4% after Morgan Stanley upgraded the stock to overweight from equal weight with a price target of $516.

Stellantis NV (STLA) is up more than +4% after UBS upgraded the stock to buy from neutral with a price target of $12.

Astera Labs (ALAB) is up more than +2% after Citigroup upgraded the stock to a buy with a price target of $275. 

Pure Storage (PSTG) is down more than -26% after forecasting Q4 operating income of $220 million to $230 million, above the consensus of $214.5 million.

Gitlab (GTLB) is down more than -15% after forecasting Q4 revenue of $251 million to $252 million, the midpoint below the consensus of $251.9 million. 

Acadia Healthcare (ACHC) is down more than -14% after cutting its full-year adjusted EPS forecast to $1.94-$2.04 from a previous estimate of $2.35-$2.45, well below the consensus of $2.37. 

Alexandria Real Estate Equities (ARE) is down more than -8% to lead losers in the S&P 500 after cutting its quarterly cash dividend to 72 cents a share from $1.32 a share to preserve liquidity.

Netflix (NFLX) is down more than -5% to lead losers in the Nasdaq 100 on news that the company is prepared to make a cash offer for Warner Bros Discovery. 

Microsoft (MSFT) is down more than -1% to lead losers in the Dow Jones Industrial Average after The Information reported that Microsoft is lowering its AI software sales quotas as consumers resist newer products. 

Earnings Reports(12/3/2025)

Dollar Tree Inc (DLTR), Five Below Inc (FIVE), Guidewire Software Inc (GWRE), Macy's Inc (M), nCino Inc (NCNO), PVH Corp (PVH), Salesforce Inc (CRM), Snowflake Inc (SNOW), Thor Industries Inc (THO), UiPath Inc (PATH). 

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