The S&P 500 Index ($SPX) (SPY) on Tuesday rose +0.46%, the Dow Jones Industrials Index ($DOWI) (DIA) rose +0.16%, and the Nasdaq 100 Index ($IUXX) (QQQ) rose +0.50%. March E-mini S&P futures (ESH26) rose +0.42%, and March E-mini Nasdaq futures (NQH26) rose +0.49%.
Stock indexes closed higher on Tuesday on reinforced confidence in US economic fundamentals after the stronger-than-expected US Q3 GDP report of +4.3%, although most of the other economic reports were weaker-than-expected. In any case, stocks were undercut as the odds for a Fed rate cut at the next meeting on Jan 27-28 dropped to 13% from 20%. Also, the 10-year T-note yield rose slightly.
US Q3 real GDP rose +4.3% (q/q annualized), stronger than expectations of +3.3% and the Q2 rate of +2.5%. The Q3 GDP Price Index rose +3.8% (q/q annualized), much stronger than expectations of +2.7% and up from Q2’s +2.1%. The Q3 core PCE Price Index rose +2.9% (q/q annualized), in line with expectations but up from Q2’s +2.6%.
The Conference Board’s Dec US consumer confidence index fell by -3.8 points to 89.1 from Nov’s revised level of 92.9 (preliminary 88.7), weaker than expectations for a report of 91.0.
The Dec Philadelphia Fed non-manufacturing index fell by -0.5 points to -16.8 from -16.3 in Nov, which was weaker than expectations for a rise to -15.0.
Oct durable goods orders fell -2.2% m/m, which was weaker than expectations of -1.5%. Oct durable goods orders ex-transportation rose +0.2% m/m, slightly weaker than market expectations of +0.3%. Oct core capital goods orders (ex transportation and defense), a proxy for capital spending, rose +0.5% m/m, which was slightly stronger than market expectations of +0.3%.
Nov US industrial production fell -0.1% m/m, slightly weaker than market expectations of +0.1%. Nov manufacturing production fell -0.4% m/m, weaker than market expectations of +0.1%.
The Dec Richmond Fed manufacturing index rose by +8 points to -7 from Nov’s -15, and was stronger than market expectations of -10.
Seasonal factors are bullish for stocks. According to data from Citadel Securities, since 1928, the S&P 500 has risen 75% of the time in the last two weeks of December, climbing 1.3% on average.
The markets are discounting a 13% chance that the FOMC will cut the fed funds target range by 25 bp at the next FOMC meeting on January 27-28.
Overseas stock markets rose slightly on Tuesday. The Euro Stoxx 50 closed up +0.10%. China’s Shanghai Composite closed up +0.07% for the fifth consecutive daily gain. Japan’s Nikkei Stock 225 closed up +0.02%.
Interest Rates
March 10-year T-notes (ZNH6) on Tuesday fell by -1.5 ticks. The 10-year T-note yield rose by +0.2 bp to 4.165%. T-note prices fell on the stronger-than-expected US Q3 GDP report of +4.3%, although most of the other economic reports released Tuesday were mildly weaker than expected on balance.
T-note prices were also undercut by supply overhang. The Treasury on Tuesday sold $70 billion of 5-year T-notes and $28 billion of 2-year floating rate notes. The Treasury will sell $44 billion of 7-year T-notes on Wednesday.
European government bond yields ended lower. The 10-year German bund yield on Tuesday fell back from Monday’s 9-month high and ended the day down -3.6 bp at 2.862%. The 10-year UK gilt yield fell by -2.7 bp to 4.509%.
Swaps are discounting a 0% chance for a -25 bp rate cut by the ECB at its next policy meeting on February 5.
US Stock Movers
The Magnificent Seven stocks all closed higher on Tuesday except for Tesla. Nvidia (NVDA) rallied by more then +3%. Alphabet (GOOGL)and Amazon.com (AMZN) closed up by more than +1%.
Chip stocks closed mixed. Marvel Technology (MRVL) and Nvidia (NVDA) rallied by more than +3%, while Globalfoundries (GFS) was the weakest chip stock with a loss of -1.7%.
Cryptocurrency-exposed stocks traded lower, with Bitcoin (^BTCUSD) falling about -0.8%.
Riot Platforms (RIOT) fell by more than -5%, and Strategy (MSTR) fell by nearly -4%. Coinbase Global (COIN) and Mara Holdings (MARA) fell by more than -2%.
Miners saw support as gold, silver, and copper all posted new record highs on Tuesday. Freeport-McMoRan (FCX) closed up +2.5%, and Newmont Mining (NEM) closed up +0.35%.
Sable Offshore Corp (SOC) soared by +36% after news that the US Department of Transportation Pipeline and Hazardous Materials Safety Administration approved the company’s Las Flores pipeline restart plan.
Zim Integrated Shipping Services (ZIM) rallied more than +5% after news of buyout interest from multiple potential bidders.
Earnings Reports(12/24/2025)
None.
On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com
