The S&P 500 Index ($SPX) (SPY) closed Monday down -0.53%, the Dow Jones Industrials Index ($DOWI) (DIA) closed down -0.90%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed down -0.36%. December E-mini S&P futures (ESZ25) fell -0.50% and December E-mini Nasdaq futures (NQZ25) fell -0.36%.
Stock indices closed lower on Monday as higher bond yields sparked a sense of risk aversion in asset markets. The 10-year Treasury yield rose +8 bps to 4.09%, as a decline in Japanese government bonds spread across global bond markets. The 10-year Japanese bond yield hit a 17-year high of 1.88% on Monday after Bank of Japan (BOJ) Governor Ueda offered his clearest signal yet that the BOJ could raise interest rates again at this month’s BOJ meeting. Bitcoin fell more than -5% on Monday to a one-week low, further weighing on market sentiment. Strength from energy producers on Monday was a positive factor for stocks, with WTI crude oil rising more than 1% to a one-week high.
US economic news on Monday was bearish for stocks after the November ISM Manufacturing Index unexpectedly fell -0.5 to a 14-month low of 48.2, weaker than expectations for a rise to 49.0. Additionally, the November ISM Prices Paid subindex unexpectedly rose +0.5 to 58.5, stronger than expectations for a drop to 57.5 and a sign of persistent price pressures.
Weaker than expected Chinese economic news was bearish for global growth prospects. China’s November Manufacturing PMI rose +0.2 to 49.2, below expectations of 49.4. Additionally, the November Non-Manufacturing PMI fell -0.6 to 49.5, weaker than expectations of 50.0 and the weakest report in almost three years.
The price of Bitcoin (^BTCUSD) fell more than -5% on Monday to a one-week low after the People’s Bank of China (PBOC) said on Saturday that “risks of speculation and hype around virtual currencies have re-emerged” and that virtual currencies do not have the same legal status as fiat currencies, lack legal tender status and should not be used as currency in the market. Bitcoin also came under pressure from comments from Strategy’s CEO, who said his company could sell Bitcoin if its mNaV, the ratio of the company’s value to the value of Bitcoin holdings, falls below 1x.
Market attention this week will be focused on economic news from the United States. On Wednesday, the November ADP employment change is expected to increase by +10,000. Additionally, September manufacturing production is expected to increase +0.1% MoM and the November ISM services index is expected to fall -0.4 to 52.0. On Thursday, Initial Weekly Jobless Claims are expected to rise by +6,000 to 222,000. On Friday, September Personal Spending is expected to increase +0.3% and September Personal Income is expected to increase +0.3% MoM. Also on Friday, the September core PCE price index, the Fed’s preferred measure of inflation, is expected to rise +0.2% mom and +2.8% year-over-year. Finally, the University of Michigan December Consumer Confidence Index is expected to rise +1.0 to 52.0.
Markets are pricing in a 100% chance of another -25bp rate cut at the next FOMC meeting on December 9-10.
The third-quarter corporate earnings season is coming to a close, as 475 of the S&P 500 companies have released results. According to Bloomberg Intelligence, 83% of reporting S&P 500 companies beat estimates, on track for the best quarter since 2021. Third-quarter earnings rose +14.6%, more than double expectations of +7.2% year-over-year.
Foreign stock markets closed mixed on Monday. The Euro Stoxx 50 closed down -0.01%. China’s Shanghai Composite hit a one-week high and closed up +0.65%. Japan’s Nikkei Stock 225 closed down -1.89%.
Interest rates
March 10-year Treasuries (ZNH6) closed down -16.5 ticks on Monday. The 10-year Treasury yield rose +8.1 bps to 4.094%. March Treasuries fell to a one-week low on Monday, and the 10-year Treasury yield rose to a one-week high of 4.096%. Treasuries came under pressure on Monday from a drop in 10-year Japanese government bonds to a 17-year low after BOJ Governor Ueda signaled the BOJ could raise interest rates at this month’s policy meeting. Additionally, Monday’s rally in WTI crude oil to a one-week high has boosted inflation expectations, a bearish factor for Treasuries. Treasuries extended their losses on Monday after the November ISM prices paid subindex unexpectedly rose, a sign of persistent price pressures.
European government bond yields rose on Monday. The German 10-year bond yield rose to a two-month high of 2.755% and ended up +6.2 bps at 2.751%. The 10-year UK bond yield rose +4.1bp to 4.481%.
The Eurozone S&P Manufacturing PMI for November was revised down by -0.1 to 49.6 from the previously reported 49.7, the sharpest pace of contraction in 5 months.
Nagel, a member of the ECB Governing Council and president of the Bundesbank, said: “Our projections suggest that interest rates in the eurozone are currently in a good place.”
The swaps price in a 2% chance that the ECB will cut rates by -25 bps at its next policy meeting on December 18.
US Stock Engines
Cryptocurrency-exposed stocks were under pressure on Monday after the price of Bitcoin fell more than -5% to a one-week low. Galaxy Digital Holdings (GLXY) closed down more than -6%, and Strategy (MSTR) and Coinbase Global (COIN) closed down more than -4%. Additionally, Riot Platforms (RIOT) closed down more than -3% and MARA Holdings (MARA) closed down more than -2%.
Casino stocks with exposure to Macau rose on Monday after Macau gaming revenue in November rose +14.4% year-on-year. Wynn Resorts Ltd (WYNN) and Melco Resorts & Entertainment Ltd (MLCO) closed with gains of more than +3%, and Las Vegas Sands (LVS) closed with gains of more than +2%.
Energy producers and energy service providers are rallying today as the price of WTI crude oil rose to a one-week high. Diamondback Energy (FANG) and Devon Energy (DVN) closed with gains of more than +2%. Additionally, ConocoPhillips (COP), Halliburton (HAL), Phillips 66 (PSX), Marathon Petroleum (MPC), and Valero Energy (VLO) closed with gains of more than +1%.
Sionna Therapeutics (SION) closed down more than -9% after RBC Capital Markets downgraded the stock to sector underperform with a $24 price target.
Moderna (MRNA) closed down more than -7%, leading vaccine makers lower and the S&P 500 to lose after William Blair pointed to an FDA report linking Covid-19 vaccines in younger people to deaths associated with myocarditis.
Joby Aviation (JOBY) closed down more than -6% after Goldman Sachs initiated coverage of the stock with a sell rating and a $10 price target.
Shopify (SHOP) closed down more than -5% to lead losers on the Nasdaq 100 after Oppenheimer said the pace of spending at the e-commerce company moderated through Sunday during the Black Friday promotional period.
Coupang (CPNG) closed down more than -5% as the company faces an investigation by South Korean authorities over a data breach that affected around 33.7 million customer accounts.
Zscaler (ZS) closed down more than -3% after Bernstein downgraded the stock to market perform from outperform.
Leggett & Platt (LEG) closed with a gain of more than +16% after Somnigroup International proposed to acquire all of the company’s outstanding shares for $12 per share.
Synopsys (SNPS) closed up more than +4% to lead gains in the S&P 500 and Nasdaq 100 after Nvidia said it had invested $2 billion in the company and announced a multi-year strategic partnership.
Old Dominion Freight Line (ODFL) closed up more than +3% after BMO Capital Markets upgraded the stock to Outperform the market with a $170 price target.
Chime Financial (CHYM) closed up more than +3% after Goldman Sachs upgraded the stock to buy from neutral with a $27 price target.
Walt Disney (DIS) closed up more than +2% to lead gains in the Dow Jones Industrials after his film Zootopia 2 grossed $272 million in China over the weekend, the second-biggest opening for a foreign film.
Earnings Reports (12/2/2025)
Crowdstrike Holdings Inc (CRWD), Gitlab Inc (GTLB), Marvell Technology Inc (MRVL), Okta Inc (OKTA), Pure Storage Inc (PSTG).
On the date of publication, Rich Asplund had no (directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article are for informational purposes only. This article was originally published on Barchart.com
