Weekly Market Performance — December 5, 2025

Markets Blog

David Matzko, LPL Research

LPL Research provides its Weekly Market Performance for the week of December 1, 2025. Equities kicked off the month of December on a mildly positive note, extending last week’s rebound with a measured advance. With a lack of big directional drivers, the S&P 500 edged back toward record highs, while global stocks ended mostly higher. Bond market investors kept a close eye on price action in Japan, as well as the potential nomination of the next Federal Reserve (Fed) Chair. Commodities traded higher as crude oil posted a strong week, while the U.S. dollar weakened against peers.

Index Performance

U.S. and International Equities

U.S. Equities: Stocks built on last week’s gains with a measured advance across major averages to start the final month of the year. Quiet headlines and low trading volume led to small moves after the S&P 500 bounced back in a big way in the final week of November, capping a fractional monthly gain. This week was characterized by a lack of major catalysts, with markets appearing to enter waiting mode ahead of the final higher-profile batch of tech-related earnings for the season and the December Fed rate decision next week. Cautiously optimistic sentiment was broadly supported by rate cut expectations remaining above 90%, with a surprise negative ADP payrolls print bringing labor market softness back into focus, and benign (but stale) September inflation data further firming rate cut expectations on Friday.

Artificial intelligence (AI) competition also remained in focus this week, with OpenAI stating its drive for ChatGPT improvements while reports indicated Amazon (AMZN) raced to get its latest AI chip to market — aimed at rivaling NVIDIA (NVDA) and Alphabet (GOOG/L). Nonetheless, price action across AI-related stocks was mixed amid the catalyst vacuum. In earnings, Marvell Technologies (MRVL) boasted repeat orders across its custom chip-design unit and announced the acquisition of privately owned startup Celestial AI. Software provider MongoDB (MDB) and small cap tech firm Credo Technology Group (CRDO) were other tech earnings bright spots.

International Equities: European stocks gained ground, also inching back towards record levels. U.S. rate cut bets lifted sentiment in a relatively quiet week for local developments. A busy week of mostly positive macro data drew attention, featuring better-than-expected October retail sales, an upward revision to third quarter economic growth, and November’s Purchasing Managers’ Index (PMI) marking the sixth straight improvement. Although, preliminary November consumer inflation data edged above prior results, virtually eliminating market hopes of another European Central Bank (ECB) rate cut this month. Meanwhile, U.K. stocks underperformed as investors continued to digest last week’s budget, with early week headlines accusing finance minister Rachel Reeves of misleading the cabinet and citizens on the state of public finances.

Asian markets ended mostly higher, despite a slide to start the week. South Korea and Taiwan continued leading regional gains, garnering support from upbeat U.S. tech earnings takeaways and a lower U.S. tariff rate on South Korean vehicles. Greater China also received a lift from tech shares, ending the week with a strong session following the successful listing of GPU-maker Moore Threads Technology. On the other hand, financials underperformed after several banks cut high-yield deposit products, indicating margin pressure. Japanese benchmarks were mixed, with a modest gain for the Nikkei and a moderate decline for the Topix. Focus remained on fiscal and monetary policy jitters and Japanese government bonds (JGBs), but equities struggled to maintain traction amid reports that a Bank of Japan (BOJ) rate hike could be around the corner.

Fixed Income, Currency, and Commodity Markets

Fixed Income: Core bonds, measured by the Bloomberg Aggregate Index, traded lower this week, with Treasuries tracking their worst week since June. Headlines over the last five days have been focused on President Trump’s expected nomination of White House National Economic Council Director Kevin Hassett as the next Fed Chair when Jerome Powell’s term ends in May. Hassett generally holds a dovish stance, suggesting prioritization of growth and employment through aggressive rate cuts, if needed. Reports around the expected nomination led to a modest steepening of the U.S. Treasury yield curve, with short-term yields falling and inflation breakevens widening slightly, signaling expectations of easier monetary policy and mild inflation concerns. However, yields were driven higher by doubts on how much the Fed might lower rates in 2026.

Meanwhile, upward pressure on yields this week was likely spilling over from an extended rise in JGB yields. The massive stimulus plan recently unveiled by the Takaichi administration has added upward pressure on yields on fresh fiscal jitters, as well as monetary policy concerns due to friction between central bankers and the administration. However, long-dated JGBs felt some relief this week following a strong 30-year auction and reports that Tokyo is willing to accept a Bank of Japan (BOJ) rate hike. However, the rest of the Treasury curve continued to move higher, with the 10-year yield trading near 19-year highst still believes the Fed will cut rates three more times by the end of 2026.

Commodities and Currencies: The broader commodities complex traded higher this week. West Texas Intermediate (WTI) crude oil reversed intra-week weakness after Russia-Ukraine peace talks failed to yield an agreement amid a surge in attacks against Russian energy infrastructure. Increased attacks supported crude as tankers loading in the Black Sea may demand higher rates, although elevated production elsewhere and oversupply concerns continue to linger. Gold traded slightly lower on the week through Friday afternoon, remaining above $4,200/ounce. Firmed rate cut expectations and a weaker dollar were supportive for the yellow metal, however, this support was countered by profit taking and ebbing haven buying. The U.S. dollar index was dragged lower by the bolstered rate cut hopes, while the yen and pound strengthened.

Economic Weekly Roundup

ADP Turned Negative in November. Small businesses are feeling the heat from trade uncertainty. Private payrolls declined in November, and that decline was most pronounced for companies with fewer than 50 employees.

ADP reported a net decline in private payrolls in November, the lowest since early 2023, and the three-month average change is now negative. Small businesses cut jobs the most since May 2020. Bucking the trend was education and health services, where net hiring increased. We expect these sectors to continue to offset weaknesses in other sectors, such as information and manufacturing. The official November jobs report from BLS will be released December 16, after the December 10 Fed meeting, and will also include a partial snapshot for October.

The faltering labor market will be the focus for the Fed next week. Since earlier this year, when we started to see a material weakening in the jobs market, labor demand has appeared weak enough for the Fed to cut, including this month. Further, the unemployment rate will likely rise by the end of the year and remain elevated in 2026. However, the education, health care services, and financial sectors will likely support the labor market next year despite the overall slowdown in hiring.

The Week Ahead

The following economic data is slated for the week ahead, but some U.S. government data releases are slated for intermittent release before month-end due to the recent shutdown.  

• Monday: New York Fed One-Year Inflation Expectations (Nov)

• Tuesday: NFIB Small Business Optimism (Nov), JOLTS Jobs Report (Sep and Oct)

• Wednesday: MBA Mortgage Applications (Dec 5), Employment Cost Index (3Q), FOMC Rate Decision (Dec 10), Federal Reserve Budget Balance (Nov)

• Thursday: Initial Jobless Claims (Dec 6), Continuing Claims (Nov 29), Trade Balance (Sep), Wholesale Inventories (Sep final), Wholesale Trade Sales (Sep), Household Change in Net Worth (3Q)

• Friday: No economic releases scheduled

IMPORTANT DISCLOSURES

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