Weekly Market Recap: Markets Drift Higher as December Begins and Fed Decision Looms
Market Overview
Markets opened December with a steady, measured advance as equities extended last week’s rebound and the S&P 500 drifted back toward record highs up 0.35%. Trading remained quiet amid a lack of major catalysts, but optimism stayed intact with rate-cut expectations holding above 90%. Global stocks also ended mostly higher, supported by softer labor data in the U.S. and improving macro conditions abroad.
U.S. equities benefited from a calm news cycle and low volumes, while investors awaited the final wave of tech-related earnings and next week’s Fed meeting. AI competition remained in focus as OpenAI turned its attention towards new ChatGPT improvements and Amazon accelerated efforts to launch its newest AI chip. Earnings from Marvell, MongoDB, and Credo Technology offered bright spots for the technology space, even as broader AI-related price action remained mixed.
International markets added to the constructive tone. Europe pushed back toward record levels thanks to stronger retail sales, upwardly revised GDP, and another improvement in PMI readings. However, slightly higher consumer inflation dampened any remaining hopes of an ECB rate cut this month. In the U.K., stocks lagged as markets continued digesting political scrutiny surrounding last week’s budget.
Across Asia, South Korea and Taiwan again led regional gains, supported by upbeat U.S. tech earnings and reduced U.S. tariffs on South Korean vehicles. Greater China rallied late in the week following the successful listing of GPU-maker Moore Threads Technology, which boosted sentiment in local tech shares. Japanese markets were mixed as concerns around fiscal stimulus, monetary policy, and JGB yields kept investors cautious ahead of a possible BOJ rate hike.
Bond markets, meanwhile, saw a reversal from November’s strength. The Bloomberg Aggregate Index traded lower as Treasuries logged their worst week since June. The potential nomination of Kevin Hassett as the next Fed Chair sparked expectations of a more dovish future policy path, steepening the yield curve as short-term rates fell. Yet longer-term yields pushed higher, influenced both by doubts about the pace of rate cuts in 2026 and by upward pressure spilling over from Japan. The 10-year Treasury hovered near 19-year highs.
Commodities ended the week higher, led by crude oil, which rebounded as Russia-Ukraine peace talks stalled and attacks on energy infrastructure escalated. Gold held above $4,200/oz, supported by a weaker dollar, although profit-taking limited gains. The dollar index softened as global rate-cut hopes firmed, while the yen and pound strengthened.
Federal Reserve Insights & Economic Roundup
The labor market returned to center stage after the ADP report showed a negative print for November - the weakest private payroll reading since early 2023. Small businesses were hit hardest, marking the deepest job cuts since May 2020. Education and health care continued to buck the trend with steady hiring, reinforcing their stabilizing role in an otherwise cooling labor environment.
This data arrives just days ahead of the December Fed meeting, where policymakers must weigh growing evidence of labor-market softness against still-contained inflation. The Fed has appeared to have sufficient justification for a rate cut for several months, but the path ahead remains delicate. We expect unemployment to trend higher into year-end and stay elevated through 2026, even as pockets of strength in health care, education, and financial services provide some balance.
The Week Ahead
Monday: NY Fed One-Year Inflation Expectations (Nov)
Tuesday: NFIB Small Business Optimism (Nov), JOLTS Job Openings (Sep & Oct)
Wednesday: MBA Mortgage Applications, Employment Cost Index (Q3), FOMC Rate Decision, Fed Budget Balance (Nov)
Thursday: Initial Jobless Claims, Continuing Claims, Trade Balance (Sep), Wholesale Inventories (final), Wholesale Trade Sales (Sep), Household Net Worth (Q3)
Friday: No scheduled releases