Market Recap - Monday, December 8, 2025
Stocks Slip as Rate Jitters and Tariffs Weigh on Sentiment
Stocks drifted lower to start the week, with the S&P 500 falling 0.35%, the Dow off 0.45%, and the Nasdaq slipping 0.14%. The Russell 2000 was nearly flat, down just 0.02%. The losses came as investors digested a mix of hawkish Fed expectations, tariff concerns, and some M&A surprises. Big tech was mostly soft - Tesla and Alphabet dropped, while Microsoft and NVIDIA outperformed. Tariff-sensitive sectors like chemicals, homebuilders, and energy were among the laggards, while areas like media, semiconductors, and banks held up better.
AI remained in focus ahead of this week’s big earnings from Oracle and Broadcom, plus the expected release of a new OpenAI model. Nvidia got a lift after news the U.S. will allow sales of its powerful H200 chips to China, while Microsoft was reportedly shifting custom chip development away from Marvell to Broadcom. Meanwhile, M&A headlines grabbed attention - PlaySky launched a $108B hostile bid for Warner Bros. Discovery, IBM agreed to buy Confluent, and Netflix’s potential deal faced antitrust scrutiny. Treasuries sold off modestly, with yields up 2–3 bps, and crude oil dropped 2% after a recent rally.
In macro news, the NY Fed’s latest consumer expectations survey showed inflation expectations were stable across time horizons, while labor market sentiment improved slightly. However, household financial outlooks worsened, with more respondents saying they felt worse off than a year ago. Investors are now laser-focused on Wednesday’s Fed meeting, where a widely expected 25 bp rate cut could be accompanied by a more cautious tone on future easing - a so-called “hawkish cut.”
Here’s Our Take:
Markets are in a bit of a holding pattern ahead of Wednesday’s FOMC meeting, with investors trying to sort through crosscurrents of AI disruption, M&A shakeups, tariff tensions, and seasonal positioning. Today’s softness reflects some profit-taking after a multi-week rally, as well as growing consensus that even if the Fed cuts rates, it may signal a slower pace going forward. Tariff-related sectors may remain under pressure in the near term, but AI themes, chip upgrades, and stronger-than-expected labor indicators are keeping the broader narrative constructive.
We’re watching closely to see how markets react to the Fed’s updated guidance, the upcoming OpenAI model launch, and earnings from AVGO and ORCL. With inflation expectations anchored and macro data still resilient, the market may still have room to run - but the next few days will be key in setting the tone for the rest of December. Investors should stay nimble and watch for leadership shifts, particularly in semis, financials, and AI-linked names.
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