Stocks Sink as Chip Stocks Retreat and Bond Yields Climb

The S&P 500 Index ($SPX) (SPY) on Friday closed down by -1.07%, the Dow Jones Industrials Index ($DOWI) (DIA) closed down by -0.51%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed down by -1.91%.  December E-mini S&P futures (ESZ25) fell -1.07%, and December E-mini Nasdaq futures (NQZ25) fell -1.94%.

Inventory indexes bought off sharply on Friday, with the S&P 500 posting a 1.5-week low, the Nasdaq 100 a 2-week low, and the Dow Jones Industrial Common retreating from a brand new all-time excessive.  Friday’s hunch in expertise shares weighed on the broader market.

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Broadcom plunged greater than -11% to steer chip makers and tech shares decrease Friday after its gross sales outlook fell in need of lofty expectations and the corporate failed to offer an AI income forecast for 2026.  This week’s disappointing outlooks from Oracle and Broadcom have additionally prompted some traders to rotate out of the tech sector amid lofty valuations and uncertainty over whether or not huge spending on AI infrastructure will finally repay.  Nonetheless, investor rotation out of tech shares into industrial shares is offering assist to the Dow Jones Industrial Common. 

Hawkish Fed feedback on Friday pushed T-note yields larger and undercut shares.  The ten-year T-note yield rose about +3 bp after Chicago Fed President Austan Goolsbee, who voted towards a Fed fee minimize on Wednesday, mentioned, “On condition that inflation has been above our goal for 4.5 years, additional progress on it has been stalled for a number of months, and virtually all of the enterprise individuals and customers we now have spoken to determine costs as a foremost concern, I felt the extra prudent course would have been to attend for extra data.” Additionally, Kansas Metropolis Fed President Jeff Schmid mentioned he dissented towards the FOMC’s resolution to chop rates of interest on Wednesday and prefers to maintain coverage “modestly restrictive” as a result of inflation stays too excessive and the financial system continues to indicate momentum.

As well as, Cleveland Fed President Beth Hammack mentioned, “I would like for the Fed to be on a barely extra restrictive stance to assist proceed to place stress” on the inflation aspect of its mandate.

On the dovish aspect, Philadelphia Fed President Anna Paulson mentioned, “On internet, I’m nonetheless a bit extra involved about labor market weak spot than about upside dangers to inflation.”

The markets are discounting a 24% likelihood that the FOMC will minimize the fed funds goal vary by 25 bp on the subsequent FOMC assembly on January 27-28.

Q3 company earnings season is nearly over as 497 of the five hundred S&P firms have launched outcomes.  Based on Bloomberg Intelligence, 83% of reporting S&P 500 firms exceeded forecasts, on track for one of the best quarter since 2021.  Q3 earnings rose +14.6%, greater than doubling expectations of +7.2% y/y. 

Abroad inventory markets settled blended on Friday.  The Euro Stoxx 50 fell from a 4-week excessive and closed down -0.58%.  China’s Shanghai Composite recovered from a 2.5-week low and closed up +0.41%.  Japan’s Nikkei Inventory 225 rallied to a 4-week excessive and closed up +1.37%.

Curiosity Charges

March 10-year T-notes (ZNH6) on Friday closed down by -9 ticks.  The ten-year T-note yield rose +3.5 bp to 4.192%.  Hawkish Fed feedback on Friday weighed on T-note costs.  Chicago Fed President Austan Goolsbee mentioned that, given larger inflation, the extra prudent course would have been for the Fed to attend for extra data earlier than chopping charges.  Additionally, Kansas Metropolis Fed President Jeff Schmid and Cleveland Fed President Beth Hammack mentioned they like to maintain coverage “modestly restrictive” as a result of inflation stays too excessive and the financial system continues to indicate momentum.  T-note costs had underlying assist from safe-haven demand amid Friday’s inventory weak spot.

T-notes are additionally below stress as a consequence of steepening trades, the place bond traders purchase short-term authorities debt and promote lengthy -term debt. The yield curve has steepened since Wednesday’s FOMC assembly, when the Fed mentioned it might start buying as much as $40 billion of short-term T-bills a month, beginning at present, to spice up liquidity within the monetary system.  Longer-term Treasury securities are additionally below stress from considerations about inflation and the Fed’s independence. 

European authorities bond yields moved larger on Friday.  The ten-year German bund yield rose +1.4 bp to 2.857%. The ten-year UK gilt yield rose +3.3 bp to 4.517%.

UK Oct manufacturing manufacturing rose +0.5% m/m, weaker than expectations of +1.1% m/m.

Swaps are discounting a 0% likelihood for a -25 bp fee minimize by the ECB at its subsequent coverage assembly on December 18.

US Inventory Movers

Broadcom (AVGO) sank greater than -11% to steer chip shares decrease after its gross sales outlook fell in need of lofty expectations and the corporate failed to offer an AI income forecast for 2026.  Additionally, Micron Know-how (MU) closed down by greater than -6%, and Marvell Know-how (MRVL) and Lam Analysis (LRCX) closed down by greater than -5%.  As well as, KLA Corp (KLAC), Superior Micro Units (AMD), and Utilized Supplies (AMAT) closed down greater than -4%.  Lastly, Intel (INTC), Nvidia (NVDA), ASML Holding NV (ASML), GlobalFoundries (GFS), and ARM Holdings Plc (ARM) closed down greater than -3%. 

AI-linked energy shares retreated on Friday after Broadcom’s gross sales outlook did not impress.  Vertiv Holdings (VRT) closed down greater than -9%, and Amphenol (APH) and Constellation Vitality (CEG) closed down greater than -7%.  Additionally, Eaton Corp Plc (ETN) closed down by greater than -5%, and GE Vernova (GEV) closed down by greater than -4%. 

Cryptocurrency-exposed shares have been below stress Friday as Bitcoin (^BTCUSD) fell greater than -3%.  Galaxy Digital Holdings (GLXY) closed down greater than -10%, and Technique (MSTR) closed down greater than +3%.  Additionally, Riot Platforms (RIOT) and MARA Holdings (MARA) closed down greater than -2%, and Coinbase World (COIN) closed down -0.58%. 

Sandisk (SNDK) closed down greater than -14% to steer losers within the S&P 500 after GF Securities downgraded the inventory to carry from purchase. 

Netskope (NTSK) closed down greater than -11% after reporting a Q3 adjusted internet lack of -10 cents per share and forecasting a full-year adjusted internet lack of -51 cents to -53 cents.   

Ciena Corp (CIEN) closed down greater than -9% after Northland Securities downgraded the inventory to market carry out from outperform. 

Roblox (RBLX) closed down greater than -6% after JPMorgan Chase downgraded the inventory to impartial from obese. 

Veeva Techniques (VEEV) closed down greater than -2% after KeyBanc Capital Markets downgraded the inventory to sector weight from obese. 

Lululemon Athletica (LULU) closed up greater than +9% to steer gainers within the S&P 500 and Nasdaq 100 after reporting Q3 EPS of $2.59, stronger than the consensus of $2.22, and elevating its 2026 EPS forecast to $12.92-$13.02 from a earlier forecast of $12.77-$12.97, above the consensus of $12.89. 

Quanex Constructing Merchandise (NX) closed up greater than +9% after reporting This autumn adjusted EPS of 83 cents, properly above the consensus of 52 cents. 

Common Electrical (GE) closed up greater than +3% after Citigroup initiated protection on the inventory with a suggestion of purchase and a value goal of $386.

Linde Plc (LIN) closed up greater than +3% after Citigroup mentioned the inventory is a brand new high decide with a purchase suggestion and a value goal of $520.

Bristol-Myers Squibb (BMY) closed up greater than +2% after Guggenheim Securities upgraded the inventory to purchase from impartial with a value goal of $62.

Allegiant Journey (ALGT) closed up greater than +1% after Deutsche Financial institution upgraded the inventory to purchase from maintain with a value goal of $105.

Earnings Reviews(12/15/2025)

Dakota Gold Corp (DC), Lifezone Metals Ltd (LZM), Lionsgate Studios Corp (LION), Triller Group Inc (ILLR). 

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