Weekly Market Update – December 5, 2025

Quick Takes

• Stocks moved higher, ending just shy of record highs, as investors wait for the Federal Reserve’s interest-rate cut decision this week. The S&P 500 added +0.3%, while the small-cap Russell 2000 gained +0.8%, and the tech-heavy Nasdaq Composite advanced +0.9%.
• Treasuries extended losses and notched their worst week since June, as the benchmark 10-year US Treasury yield climbed +12 basis points to 4.14%. The Bloomberg U.S. Aggregate Bond Index returned -0.5% and the Global Aggregate ex U.S. Bond Index slipped -0.06%.
• Reports showed US private employment unexpectedly fell in November, but that was countered by better-than-expected reports for initial jobless claims and consumer sentiment, which rose for the first time in five months.

Source: Bloomberg. Data as of December 5, 2025.
Price Returns for Equity, Total Returns for Bonds.
* The term basis points (bps) refers to a common unit of measure for interest rates and other percentages in finance. One basis point is equal to 0.01%. Bond prices and bond yields are inversely related. As the price of a bond goes up, the yield decreases.

Equities Rally On, Bonds Fall, Ahead of December Fed Meeting

Major US stock indexes kicked off the first week of December with a volatile first week of trading higher, but ultimately adding to the prior week’s gains, as investors wait for an interest rate cut from the Federal Reserve (the Fed) at its meeting this Wednesday. The three major US stock index averages saw range-bound trading throughout the week and eventually ended up positive for the week. The pattern was consistent with historical trading trends during this holiday time of the year. 

Investors were carefully watching last week’s economic data for labor market and inflation updates. Reports showed US private employment unexpectedly fell in November, but that was countered by better-than-expected reports for initial jobless claims and consumer sentiment, which rose for the first time in five months (see The Chart of the Week for more detail). Meanwhile, inflation appears under control, or at least it was in Friday’s delayed September report of the Personal Consumption Expenditure (PCE) index, which fell to its lowest year-over-year (YoY) level since May. The September PCE, delayed by the government shutdown, rose +2.8% year over year, matching Wall Street forecasts. The growth in Core PCE, which excludes volatile categories like food and fuel, was also up +2.8% YoY, but it slowed from August. That’s a big deal for the Fed, because they closely track the index as their preferred inflation gauge. The 2.8% Core PCE increase is still above the Fed’s 2% inflation target, and while the Fed may be all but guaranteed to cut interest rates this week, next year’s monetary policy is far from certain. 

For the week, the S&P 500 Index added +0.3%, while the small-cap Russell 2000 Index gained +0.8%, and the tech-heavy Nasdaq Composite Index advanced +0.9%. The S&P 500 remains within a whisker of October’s all-time high, and the Nasdaq is just -1.6% away from its October record high. The Russell 2000 set its most recent closing high on Thursday. For the first time in three weeks, and only the third time in the last eight weeks, non-US stocks beat their US counterparts. The developed markets MSCI EAFE Index rose +0.8% and the MSCI Emerging Markets Index gained +1.4%. Other than the MSCI Latin America Index, which fell -0.7%, most international equity regions were positive for the week. 

Treasuries extended losses and notched their worst week since June, as the benchmark 10-year US Treasury yield climbed +12 basis points to 4.14%. The 30-year UST yield ended the week up +13 basis points at 4.79% and the 2-year UST yield was up +7 basis points to 3.56%. With yields up, bond returns were down (bond yields and returns move in opposite directions). The Bloomberg U.S. Aggregate Bond Index returned -0.5% following the prior week’s +0.4% return. Non-US bonds, as measured by the Bloomberg Global Aggregate ex U.S. Bond Index, were just barely down, with a -0.06% return following the prior week’s +0.9% gain.

Chart of the Week

The preliminary reading of the December University of Michigan Consumer Sentiment Index increased to 53.3, from a final reading of 51.0 the prior month, and beating expectations to come in at 52.0. It was the first increase in the index since July. In the same period a year ago, the index stood at 74.0. The Current Economic Conditions component dropped to 50.7 from 51.1 the prior month. The Consumer Expectations component jumped to 55.0 from 51.0 the prior month. One-year inflation expectations fell to 4.1% from 4.5% the prior month. The five-year inflation expectations were 3.2%, down from 3.4% the prior month. The bottom line is that consumer sentiment remains low, but future expectations saw a nice improvement and inflation expectations also dropped.

The Preliminary December Consumer Sentiment Reading Ticks Up

University of Michigan Consumer Sentiment Index, Dec. 2009 – Dec. 2025

Source: University of Michigan, Briefing.com.

The Week Ahead

Investors will be closely watching the decision of the final Fed meeting of the year on Wednesday afternoon and Jerome Powell’s press conference afterwards. Wall Street anticipates a quarter-point rate cut, and for Powell is to deliver a “hawkish” message, meaning he’ll likely downplay rate cuts early next year. The Fed Chair has stressed that there are risks to both sides of the Fed’s dual mandate, stable prices and maximum employment, and monetary policy should reflect that risk. The new dot plot is expected to be unchanged from September’s, signaling one 25-bp cut in 2026, and the rate-cut pace will depend on the jobs data. Before that, economic data will begin to flow on Tuesday (no major reports on Monday), with Small Business Optimism and JOLTS Job Openings. Wednesday will also see the Employment Cost Index and Federal Budget Balance. On Thursday, the calendar wraps up for the week with Jobless Claims, Trade Balance, Wholesale Inventories, and Household New Worth.

A few mega cap company earnings reports will also come out during an otherwise quiet earnings calendar: Adobe and Oracle on Wednesday, and Broadcom and Costco Wholesale on Thursday.

Did You Know?

BOOMER BLUES – Counter to the recent narrative that young consumers are struggling the most, November consumer confidence among those under 35 jumped to its highest level since July 2023, while confidence among those 55 and older hit its lowest level since January 2021. (Source: The Conference Board)

LISTINGS VANISH – In September, 5.5% (84,278) of all home listings were delisted, which was the highest percentage for September since at least 2016. 70% of September’s delistings were considered “stale,” meaning that they had been on the market for at least 60 days without going into contract. (Source: Redfin)

RECORD SHADOW LENDING – The latest Quarterly Banking Profile from the FDIC showed that bank loans to nonbank financial institutions (NBFIs) in Q3 surged 46.6% for the largest year-over-year increase since Q3 2013. Loans to NBFIs now account for a record 10.0% of total loan books. (Source: FDIC)

This Week in History

HAPPY 45th NIKE – On December 2, 1980, Nike went public through an IPO at a split adjusted price of $0.18 per share. Nike paid $35 for Carolyn Davidson to create the Nike logo in 1971, but they also gifted her 500 shares in the IPO (64K shares after splits). According to founder Phil Knight, Carolyn has held to today and the shares are currently worth $4.15 Million (Source: Wolf Financial)

Economic Review

• The ADP Employment Change report showed US companies shed payrolls in November by the most since early 2023. Private-sector payrolls decreased by -32,000, with companies with fewer than 50 employees shedding -120,000 jobs, the largest one-month decline since May 2020. The ADP report showed wage growth cooled, with workers who changed jobs seeing a +6.3% increase in pay, the lowest since February 2021. Job creation has been flat during the second half of 2025, and pay growth has been on a downward trend. “Hiring has been choppy of late as employers weather cautious consumers and an uncertain macroeconomic environment,” says Dr. Nela Richardson, Chief Economist, ADP. 
• The Institute for Supply Management’s (ISM) Manufacturing PMI slipped to 48.2% in November from an unrevised 48.7% the prior month. That was shy of Wall Street consensus expectations for it to rise to 49.0% and marks nine consecutive months it has been below the 50.0% dividing line between economic expansion (above 50%) and contraction (below 50%). The details were mixed, with the index of New Orders, a sign of future demand, falling to 47.4% from 49.4% in October. However, the New Export Orders index improved to 46.2% from 44.5%. The Production component increased to 51.4% from 48.2%. But the Employment index dropped to 44.0% from 46.0%. The Prices index, a measure of inflation, rose to 58.5% from 58.0%, which was the lowest level since January.  
• The ISM Services PMI inched up to 52.6% from 52.4% in October, exceeding expectations for a 52.0% reading. Service-oriented companies, such as restaurants and retailers, employ most Americans. The New Orders component dropped to 52.9% from 56.2% the prior month. But the Production component inched up to 54.5% from 54.3% the prior month. Imports rebounded to 48.9% from 43.7% the prior month. The Backlog of Orders jumped +8.3 points to 49.1% while Inventories rose +3.9 points to 53.4%. The Employment component improved slightly to 48.9% from 48.2%. The Prices index sank -4.6 points to 65.4%. Overall, the report showed an improvement in growth for the key service sector portion of the US economy, but at a tepid pace.
• Unlike the competing ISM Manufacturing PMI, the S&P Global U.S. Manufacturing PMI (which is generally smaller companies than the ISM survey and more domestically focused) slipped in September, to 52.2 from 52.5 the prior month, but still marked a fourth successive month in expansion territory. That was better than the flash reading two weeks prior of 51.9, where it was expected to remain. Production (Output) rose at the fastest pace since August, supported by gains from both new and existing clients. Strong production growth contrasted with weaker sales, leading to a record surge in finished-goods Inventories for the second month in a row, the largest rise in the survey’s 18-year history. New Orders growth slowed sharply from the prior month, signaling weaker demand. New Export Orders fell for a fifth consecutive month — the steepest drop since July — linked to Tariffs and slowing demand from Asia. Still, Employment growth hit a three-month high, as firms added staff to meet production needs and anticipated future demand. Tariffs remained a key source of higher Input Prices, especially metals, while Output Prices increased too, but at one of the lowest rates of the year as weaker demand limited the ability of firms to pass on higher costs. Despite the weaker-than-expected sales, Confidence jumped to its highest level since June, with policy support and lower expected interest rates cited for the improved business sentiment.
• Unlike the competing ISM Services PMI, the S&P Global U.S. Services PMI weakened in November to 54.1 from 54.8 but still marked 34 months above the key 50.0 expansion level. That was below the flash estimate of 55.0 two weeks ago and is the lowest reading since June. Still, business activity remains solid with financial services leading the expansion, while consumer services saw the weakest growth in four months. New Orders rose at the fastest pace of the year, signaling robust client demand. Employment growth accelerated as firms added staff to meet rising workloads, contrasting with the ISM report of contraction. Input Costs rose at the fastest pace since May, largely from tariffs and labor costs. Meanwhile, Selling Prices remained above the long-term average but slowed from the summer pace. Business Confidence improved thanks to expectations of lower interest rates and relief from the government shutdown ending.
• The Commerce Department reported that Factory Orders rose +0.2% in September, below expectations for +0.3%, and down sharply from +1.3% the prior month (revised down from +1.4%). Factory Orders Excluding Transportation were up +0.2%, up from -0.1% the prior month after being revised down from +0.5%. Durable Goods Orders for long-lasting items such as televisions, appliances, and transportation equipment rose +0.5%, in line with expectations from where they were in the advance report. That was down sharply from +3.0% drop in August. Durable Goods Orders Ex Transportation were up +0.6%. The important Core Capital Goods Orders (capital goods excluding volatile sectors like transportation and defense), a proxy for business spending, was up +0.9%, unchanged from the advance reading and the prior month’s reading. Core Capital Goods Shipments, which are factored into GDP, were also up +0.9%, up from the prior month’s -0.1% drop. The inventory-to-shipments ratio was unchanged at 1.56. 
• Imports Prices were unchanged in September, below expectations for a +0.1% increase, and down from a +0.1% increase the prior month (revised lower from +0.3%). Import Prices ex Petroleum were up +0.2%, the same as the prior month (unrevised) and above expectations for +0.1%. Year-over-year, the cost of imports was up +0.3%, under expectations for a +0.4% increase, suggesting that foreign exporters are holding the line on prices, despite tariffs. That was up from the prior month’s -0.1% annual rate after it was revised down from 0.0%. Export Prices were flat as well, above expectations for a -0.1% dip and down from +0.1% the prior month (after being revised down from +0.3%). Export prices accelerated to +3.8% over the past year, up from last month’s +3.2% annual rate (revised down from +3.42%), but this measure is expected to decelerate further, given the recent streak of soft monthly gains.
• Personal Spending rose +0.3% in September, matching expectations but down from the +0.5% prior month (revised lower from +0.6%). After adjusting for inflation, Real Personal Spending was flat for the month, under expectations for +0.1% and down from +0.2% the prior month (revised down from +0.4%). Personal Income increased +0.4%, unchanged from the prior month (unrevised) and ahead of expectations for +0.3%. Real Disposable Income was up +0.1% month-over-month, and up +1.9% year-over-year. The Personal Savings Rate was steady at +4.7%.
• The cost of goods and services rose +0.3% in September, matching expectations and unchanged from the prior month (unrevised). For the year the Personal Consumption Expenditure (PCE) Deflator (aka PCE Price Index) was up +2.8%, in line with expectations and up a tick from the prior month’s +2.7% (unrevised). The Core PCE Price Index, which excludes food and energy and is the Fed’s preferred inflation gauge, was up +0.2% for the month, also matching expectations and unchanged from the prior month (unrevised). Year-over-year, the Core-PCE Price Index was up +2.8%, matching expectations and down from +2.9% (unrevised) the prior month.
• U.S. Industrial Production increased +0.1% for the month of September, matching expectations and up from the -0.3% decrease the prior month (revised down from +0.1%). Manufacturing Production was flat, also in line with expectations, and down from +0.1% the prior month (after being revised lower from +0.2%). Manufacturing represents about three-quarters of total Industrial Production. Year-over-Year, Industrial Production was up +1.6%, following the prior month’s +0.9% annual pace. Capacity Utilization was unchanged at 75.9% after the prior month was revised lower from 77.4%. Capacity Utilization reflects how much a manufacturing plant is being used to produce things. The key takeaway from the report is that Capacity Utilization slowed, which could mean there is slack in the industrial sector, which could reduce inflation pressure.
• Weekly MBA Mortgage Applications slipped -1.4% for the week ending November 28, after inching up +0.2% the prior week. The Purchase Index rose +2.5% after jumping +7.6% the prior week. The Refinance Index fell -4.5% after dropping -5.7% the prior week. The average 30-Year Mortgage Rate fell to 6.32% from 6.40% the prior week.
• Weekly Initial Jobless Claims fell -27,000 to 191,000 for the week ending November 28, better than expectations for 220,0000. The prior week was revised higher to 218,000 from 216,000. The number of people already collecting unemployment claims (i.e., Continuing Claims) fell -4,000 to 1,939,000 for the week ending November 8, which was better than expectations for 1,963,000. The prior week’s reading was revised lower from 1,963,000 to 1,943,000. 

Asset Class Performance

Source: Bloomberg.
Asset‐class performance is presented by using market returns from an exchange‐traded fund (ETF) proxy that best represents its respective broad asset class. Returns shown are net of fund fees for and do not necessarily represent performance of specific mutual funds and/or exchange-traded funds recommended by The Retirement Planning Group. The performance of those funds may be substantially different from the performance of the broad asset classes and to proxy ETFs represented here. US Bonds (iShares Core US Aggregate Bond ETF); High‐Yield Bond (iShares iBoxx $ High Yield Corporate Bond ETF); Intl Bonds (Vanguard Total International Bond ETF); Large Growth (iShares Russell 1000 Growth ETF); Large Value (iShares Russell 1000 Value ETF); Mid Growth (iShares Russell Mid-Cap Growth ETF); Mid Value (iShares Russell Mid-Cap Value ETF); Small Growth (iShares Russell 2000 Growth ETF); Small Value (iShares Russell 2000 Value ETF); Intl Equity (iShares MSCI EAFE ETF); Emg Markets (iShares MSCI Emerging Markets ETF); and Real Estate (iShares US Real Estate ETF). The return displayed as “Allocation” is a weighted average of the ETF proxies shown as represented by 24% US Bonds, 10% International Bonds, 6% High Yield Bonds, 13.8% Large Growth, 13.8% Large Value, 3.6% Mid Growth, 3.6% Mid Value, 1.2% Small Growth, 1.2% Small Value, 16.8% International Stock, 4.2% Emerging Markets, 1.8% Real Estate.
* The term basis points (bps) refers to a common unit of measure for interest rates and other percentages in finance. One basis point is equal to 0.01%. Bond prices and bond yields are inversely related. As the price of a bond goes up, the yield decreases.