The S&P 500 Index ($SPX) (SPY) today is up by +0.05%, the Dow Jones Industrials Index ($DOWI) (DIA) is up by +0.26%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down by -0.22%.  December E-mini S&P futures (ESZ25) are up +0.03%, and December E-mini Nasdaq futures (NQZ25) are down -0.19%.

Stock indexes are modestly lower ahead of the start of the 2-day FOMC meeting today.  The market remains cautious about the pace of Fed easing beyond Wednesday’s decision, when the Fed is expected to cut interest rates by 25 bp.   Stock losses are limited as bond yields move lower, with the 10-year T-note yield down -2 bp to 4.15%.

The markets this week will focus on government reports and the FOMC meeting.  Later today, Oct JOLTS job openings are expected to increase by 7,117.  On Wednesday, the Q3 employment cost index is expected to climb by +0.9%.  The results of the Tue/Wed FOMC meeting are expected to show a -25 bp cut in the federal funds target range to 3.50%-3.75%.  The markets will also look at the Fed's summary of economic projections and its dot-plot interest rate forecast.  In addition, post-meeting comments from Fed Chair Powell on Wednesday about the future direction of interest rates could move the markets.  On Thursday, weekly initial unemployment claims are expected to increase by +29,000 to 220,000. 

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

The markets are discounting a 95% chance of another -25 bp rate cut at the conclusion of the 2-day FOMC meeting on Wednesday.

Q3 corporate earnings season is drawing to a close as 495 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 fell from a 3.5-week high and is down -0.17%.  China’s Shanghai Composite closed down -0.37%.  Japan’s Nikkei Stock 225 closed up +0.14%.

Interest Rates

March 10-year T-notes (ZNH6) today are up +5 ticks.  The 10-year T-note yield is down -2.0 bp to 4.145%.  Mar T-note futures are moving higher due to some mild short covering ahead of the 2-day FOMC meeting that begins today.  The weakness in stocks today has also boosted some safe-haven demand for T-notes.  Supply pressures are limiting the upside in T-notes as the Treasury will auction $39 billion of 10-year T-notes later today. 

European government bond yields are moving lower today.  The 10-year German bund yield fell from an 8.5-month high of 2.879% and is down by -1.3 bp to 2.849%.  The 10-year UK gilt yield is down by -3.1 bp to 4.497%.

German trade news was weaker than expected after German Oct exports rose +0.1% m/m, weaker than expectations of +0.2% m/m.  Also, Oct imports fell -1.2% m/m, weaker than expectations of -0.5% m/m.

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

Toll Brothers (TOL) is down more than -4% to lead homebuilders lower after forecasting 2026 deliveries of 10,300 to 10,700, below the consensus of 10,843.  Also, Lennar (LEN), D R Horton (DHI), and PulteGroup (PHM) are down more than -1%. 

SLM Corp (SLM) is down more than -17% after Compass Point Research & Trading LLC double-downgraded the stock to sell from buy with a price target of $23.   

Caleres (CAL) is down more than -10% after reporting Q3 adjusted EPS of 38 cents, well below the consensus of 85 cents. 

Graphic Packaging Holding (GPK) is down more than -9% after forecasting full-year net sales of $8.4 billion to $8.6 billion, the midpoint below the consensus of $8.56 billion.   

AutoZone (AZO) is down more than -4% to lead losers in the S&P 500 after reporting Q1 comparable sales rose +5.50%, weaker than the consensus of +5.93%. 

Ollie’s Bargain Outlet Holdings (OLLI) is down more than -1% after reporting Q3 comparable sales rose +3.30%, weaker than the consensus of +3.74%.

Ares Management (ARES) is up more than +6% after S&P Dow Jones Indices said the company will replace Kellanova in the S&P 500 before trading begins on Thursday, December 11.   

Core & Main Inc (CNM) is up more than +5% after reporting Q3 net sales of $2.06 billion, better than the consensus of $2.05 billion. 

CVS Health (CVS) is up more than +4% to lead gainers in the S&P 500 after raising guidance on its full-year adjusted EPS forecast to $6.60-$6.70 from a previous forecast of $6.55-$6.65, the midpoint stronger than the consensus of $6.63. 

Viking Holdings Ltd (VIK) is up more than +1% after Goldman Sachs upgraded the stock to buy from neutral with a price target of $78. 

Eaton Corp Plc (ETN) is up more than +1% after Wolfe Research upgraded the stock to outperform from peer perform with a price target of $413.

Otis Worldwide (OTIS) is up more than +1% after BNP Paribas Exane upgraded the stock to outperform from neutral with a price target of $105.

Earnings Reports(12/9/2025)

AutoZone Inc (AZO), Campbell's Company/The (CPB), Casey's General Stores Inc (CASY), Core & Main Inc (CNM), Ferguson Enterprises Inc (FERG), GameStop Corp (GME), Ollie's Bargain Outlet Holding (OLLI), SailPoint Inc (SAIL). 

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