The S&P 500 Index ($SPX) (SPY) on Wednesday rose +0.32%, the Dow Jones Industrials Index ($DOWI) (DIA) rose +0.60%, and the Nasdaq 100 Index ($IUXX) (QQQ) rose +0.27%. March E-mini S&P futures (ESH26) rose +0.27%, and March E-mini Nasdaq futures (NQH26) rose +0.20%.
Stock indexes ended the day mildly higher ahead of Thursday’s Christmas holiday. US stock exchanges closed early at 1pm (Eastern) on Wednesday for Christmas Eve. The S&P 500 index on Wednesday edged to a new record high.
Stocks received a boost on Wednesday from the -2.9 bp decline in the 10-year T-note yield.
Stocks have continued support from confidence about the US economic outlook after Tuesday’s news that US Q3 real GDP rose by +4.3% (q/q annualized), much stronger than market expectations of +3.3%. However, most of Tuesday’s other US economic reports were on the weaker side, led by the -3.8 point drop in the Conference Board’s Dec US consumer confidence index to 89.1 from the revised Nov level of 92.9 (preliminary 88.7), which was weaker than market expectations of 91.0.
In a report released Wednesday, US weekly initial unemployment claims fell by -10,000 to 214,000 in the week ended Dec 20, showing a stronger labor market than expectations of 224,000. Continuing claims rose by +38,000 to 1.923 million from the previous week’s revised 1.885 million (preliminary 1.897 million), which showed a weaker labor market than expectations of 1.900 million.
China’s central bank on Wednesday issued a cautious statement after its quarterly monetary policy meeting. The PBOC indicated that it is focused on long-term stability and suggested that it will not engage in sudden interest rate cuts to address problems such as property market weakness, weak domestic demand, and the trade war with the US.
Seasonal factors are bullish for stocks. According to data from Citadel Securities, since 1928, the S&P 500 has risen 75% of the time in the last two weeks of December, climbing 1.3% on average.
The markets are discounting the odds at 16% for a -25 bp rate cut at the FOMC’s next meeting on Jan 27-28.
Overseas stock markets closed mixed on Wednesday. The Euro Stoxx 50 fell -0.05%. China’s Shanghai Composite closed up +0.53% for the sixth consecutive daily gain. Japan’s Nikkei Stock 225 closed down -0.14%.
Interest Rates
March 10-year T-notes (ZNH6) on Wednesday rose by +7 ticks. The 10-year T-note yield fell -2.9 bp to 3.134%. T-note prices saw support from the -0.4 bp decline in the 10-year breakeven inflation expectations rate to 2.236%. T-note prices were undercut by supply overhang as the Treasury on Wednesday sold $44 billion of 7-year T-notes.
European government bond yields were little changed. The 10-year German bund yield ended the day unchanged at 2.862%. The 10-year UK gilt yield fell -0.2 bp to 4.507%.
Swaps are discounting a 3% chance of a +25 bp rate hike by the ECB at its next policy meeting on February 5.
US Stock Movers
The Magnificent Seven stocks closed narrowly mixed. Apple (AAPL) rose +0.5%, but Nvidia (NVDA) fell -0.5%.
Intel (INTC) fell by -0.8% after Reuters reported that Nvidia (NVDA)halted a test using Intel’s 18A manufacturing process during a test run to make advanced chips, suggesting Nvidia sees deficiencies in the technology. Nvidia agreed to invest $5 billion in Intel in September as part of the deal, where the Trump administration took a 10% stake in Intel as a means to reinvigorate the US-based chip producer.
Otherwise, chip stocks closed mixed. Micron Technology (MU) rallied more than +3%, but Marvel Technology (MRVL) and ON Semiconductor (NXPI) fell by more than -1%.
Cryptocurrency-exposed stocks closed mixed, with Bitcoin (^BTCUSD) falling about -0.3%.
Coinbase Global (COIN) fell -1.1%, but Riot Platforms (RIOT) rose +1.8%.
Nike (NKE) rallied +4.6% after news that Apple’s Tim Cook bought $2.95 million worth of Nike shares on December 22.
AST SpaceMobile (ASTS) fell -9% even though the company launched its largest satellite yet, beginning its effort to build a satellite-based Internet network to compete with SpaceX’s Starlink service.
Dynavax (DVAX) soared by +38% after news that Sanofi will buy the vaccine maker for about $2.2 billion.
Earnings Reports(12/26/2025)
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On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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