Wall Street Traders on Hold in Run-Up to Jobs Data: Markets Wrap

(Bloomberg) — The last full trading week of 2025 started with stocks, bonds and the dollar wavering as Wall Street geared up for key economic data that will help shape the Federal Reserve rate outlook.

On the eve of the jobs report, the S&P 500 closed mildly lower. A renewed tech slide saw Broadcom Inc. posting its worst three-day plunge since 2020. Oracle Corp. extended its multi-session selloff to about 17%. A rout in cryptocurrencies also kept a lid on riskier assets.

Subscribe to the Stock Movers Podcast on Apple, Spotify and other Podcast Platforms.

Treasury two-year yields edged down amid bets the Fed will cut rates twice next year to support the job market even as inflation shows signs of stickiness. The dollar barely budged, but closed at the lowest since October.

“Investors appear indecisive about making bold moves ahead of a heavy plate of high-profile economic data,” said Jose Torres at Interactive Brokers.

Following the Fed’s latest decision to slash rates, the November jobs report — due on Tuesday — is expected to show a sluggish labor market. The reading will also include an estimate of October payrolls — figures that were delayed by the federal shutdown.

The fallout from the longest-ever government closure extended to another key indicator: the consumer price index scheduled for Thursday.

With the Fed still appearing to be more focused on labor-market weakness than inflation, we’re likely facing a “bad news is good” scenario for the jobs report, according to Chris Larkin at E*Trade from Morgan Stanley.

“As long as the numbers don’t suggest employment is falling off a cliff, the markets may embrace soft data because it could lead to a more-dovish Fed,” he said.

Fed Governor Stephen Miran argued the policy stance is unnecessarily restrictive. Fed Bank of New York President John Williams said policy is well positioned for next year following last week’s reduction. His Boston counterpart Susan Collins noted the rate decision was a “close call” as she’s concerned about high inflation.

The S&P 500 closed below 6,820. Megacaps were mixed, with Apple Inc. falling while Tesla Inc. climbed. Small firms underperformed. In late hours, B. Riley Financial Inc. said it filed its overdue second-quarter report with US regulators in a step toward staying listed.

The yield on 10-year Treasuries was little changed at 4.18%. Bitcoin sank below $86,000. The yen gained on bets the Bank of Japan will hike rates this week. Oil slipped.

Moderate weakness in this week’s US job numbers could feed bullishness toward stocks by increasing the probability of further Fed rate cuts, according to Morgan Stanley strategist Michael Wilson.

“Markets are looking for a soft print,” said Fawad Razaqzada at Forex.com. “Any downside surprise could see expectations for the next Fed rate cut pulled forward, while a hawkish surprise could lift the dollar sharply.”

A survey conducted by 22V Research shows that expectations for the market reaction to Tuesday’s jobs data are about evenly distributed: 29% said “risk-on,” 36% “risk-off” and 36% “mixed/negligible.”

At Evercore, Krishna Guha notes that the worse the data, the more the market will bet that the Fed will abandon its attempt to pause following the December rate reduction.

However, Guha cautions against thinking that – absent a very extreme outcome – the report will be decisive in terms of whether the Fed cuts again in the near term.

“We think the December print – the first relatively clean print after the shutdown – will have a much bigger bearing on whether the Fed might still cut in January,” he concluded

There are obvious data-quality concerns given that the Bureau of Labor Statistics has been playing catchup following the government shutdown, according to Ian Lyngen at BMO Capital Markets. Therefore, investors might take a more cautious view to trading this week’s key data prints.

“However, in light of the lack of fundamental information regarding the performance of the real economy during the shutdown, the insights within the payrolls and inflation reports will nonetheless set the tone for the US rates market as year-end, holiday-trading mode quickly approaches,” he noted.

If market expectations are right, that could set the stage for another solid run for Treasuries, which are headed for their best year since 2020.

Against that backdrop, traders are building options positions that would pay off if market sentiment shifts to a rate cut in the first quarter. For now, another reduction isn’t fully priced in until mid-year, with a second one in October.

To Elias Haddad at Brown Brothers Harriman & Co., the Fed has room to deliver the 50 basis points of easing priced-in by Fed funds futures over the next 12 months.

“The decline in the hiring rate suggests labor demand is weak and points to downside risk to this week’s nonfarm payrolls release,” he added.

“This year is a little different given the delayed releases of various economic data points thanks to the recent shutdown”, wrote Susquehanna International Group’s Christopher Jacobson. “That arguably sets the stage for greater volatility, particularly this week.”

Derivatives strategists at JPMorgan Chase & Co. including Bram Kaplan note that the S&P 500 options market is moderately underpricing the upcoming payrolls report compared to historical volatility around releases.

Markets are bracing for a roughly 0.7% move in either direction on the print, according to data compiled by Bloomberg.

Even as it appears that the Fed is more focused on the labor market at this time, the market is still hungry for inflation data, according to Rick Gardner at RGA Investments

At HSBC, Max Kettner says that while he remains “aggressively risk-on” into next year, 2026 might well turn out rockier than the past eight months.

“We think the biggest risk in the coming months is a significant rise in US rates vol,” he said. “However, in our view, this is unlikely to be a theme for the coming weeks.”

Kettner noted that Treasury yields are still quite far from the “danger zone” – the area where risk asset valuations are increasingly hit by higher yields.

Citigroup Inc.’s Scott Chronert sees the S&P 500 climbing to 7,700 points by the end of 2026, with robust earnings and expectations of easing monetary policy at the heart of the forecast.

“A generally supportive Fed is a key assumption in our playbook,” Chronert wrote in a note.

Meantime, Oppenheimer Asset Management strategists maintained an overweight call on US stocks, saying they “expect the US economy and markets to lead the world economy into some kind of a new normal.”

The team led by John Stoltzfus expects the rally to broaden in 2026 as economic fundamentals remain supportive of continued revenue and earnings growth.

“We believe investors should position to gain from the expected equity rally in the coming year, adding exposure to tech, health care, utilities, and banking for those under-allocated to the US market,” said Mark Haefele at UBS Global Wealth Management.

Haefele expects the S&P 500 to reach 7,300 by June next year and 7,700 by the end of 2026.

Corporate Highlights:

Amazon.com Inc.’s business ties with Israel’s military and the US Department of Homeland Security are the focus of a shareholder proposal demanding that the company investigate whether such contracts comply with its responsible AI policies. PayPal Holdings Inc. applied to become a bank in the US, looking to take advantage of the Trump administration’s openness to financial-technology companies entering the banking system. iRobot Corp., the company that revolutionized robot vacuum cleaners in the early 2000s with its Roomba model, filed for bankruptcy and proposed handing over control to its main Chinese supplier. General Motors Co. has cut a deal with Apple Inc. to bring the Apple Music app into Chevrolet and Cadillac models starting Monday, when the automaker will send it to vehicle owners with an over-the-air update. Ford Motor Co. announced a sweeping overhaul of its electric vehicle business after struggling for years to make it profitable. Target Corp., Walmart Inc. and other large grocery chains were warned by US regulators for continuing to sell ByHeart infant formula that’s been recalled because it’s potentially contaminated with spores that cause botulism. ServiceNow Inc. and Adobe Inc. were downgraded to underweight at Keybanc, which sees AI tools bringing a bigger hit to both software firms. PME, a Dutch pension fund overseeing about $70 billion, has severed ties with BlackRock Inc. based on an assessment that the world’s largest money manager no longer acts in its best interests on issues such as climate risk. Chevron Corp. lowered the price of Venezuelan crude offered to US refiners after a tanker was seized by American forces in the Caribbean and as global prices drifted lower. Spirit Aviation Holdings Inc. received a short-term lifeline from creditors after securing access to another tranche of financing, easing immediate pressure on the carrier as it works through its second bankruptcy in less than a year. Michael Saylor’s Strategy Inc. acquired almost $1 billion in Bitcoin for a second consecutive week, as the original digital asset treasury company continues to ramp up purchases following the recent pullback in the price of the largest cryptocurrency. JPMorgan Chase & Co. and the US government are backing Korea Zinc Co.’s planned $7.4 billion smelter in Tennessee that will supply critical minerals essential for chip-making, defense and aerospace. Airbus SE supplier Sofitec Aero SL has told employees it is working on a joint plan with the planemaker to address panel-quality problems that have disrupted aircraft deliveries. Sanofi’s experimental multiple sclerosis drug got hit with two setbacks on Monday: a regulatory delay in the US as well as a failure in a late-stage clinical trial. Sanofi agreed to pay US biotech Dren Bio as much as $1.8 billion, including $100 million upfront, as the French company expands a push to develop medicines for immune-system diseases. Juventus Football Club SpA rose after Tether Holdings SA made a €1.1 billion ($1.3 billion) takeover bid to acquire the Italian football club at a 21% premium, an offer that was swiftly rejected by the Agnelli family’s holding company. Mitsubishi UFJ Financial Group Inc. is nearing a deal to buy a minority stake in India’s Shriram Finance Ltd., according to people familiar with the matter, the latest foreign bank seeking to build a presence in the world’s most populous country. Troubled conglomerate Novonor SA is closer to a deal to sell its controlling stake in petrochemical giant Braskem SA to a fund advised by asset manager IG4 Capital. ASX Ltd. sank after Australia’s corporate regulator imposed a A$150 million ($99.6 million) capital charge on the firm, prompting the embattled exchange operator to slash its dividend. What Bloomberg strategists say…

“Better labor market data or worse inflation data would mean last week’s equity broadening via a rotation into banks, industrials, and cyclicals was a harbinger of economic re-acceleration. Given the rise in bond yields could start to work against higher-beta equities if 10-year yields break resistance at 4.20%, the Goldilocks outcome would be an upside surprise in jobs and an inline or downward surprise in the CPI reading.”

— Edward Harrison, Macro Strategist, Markets Live. For the full analysis, click here.

Some of the main moves in markets:

Stocks

The S&P 500 fell 0.2% as of 4 p.m. New York time The Nasdaq 100 fell 0.5% The Dow Jones Industrial Average was little changed The MSCI World Index was little changed Bloomberg Magnificent 7 Total Return Index rose 0.1% The Russell 2000 Index fell 0.8% Currencies

The Bloomberg Dollar Spot Index fell 0.1% The euro was little changed at $1.1749 The British pound was little changed at $1.3373 The Japanese yen rose 0.4% to 155.26 per dollar Cryptocurrencies

Bitcoin fell 3.3% to $85,569.51 Ether fell 5.2% to $2,921.42 Bonds

The yield on 10-year Treasuries was little changed at 4.18% Germany’s 10-year yield was little changed at 2.85% Britain’s 10-year yield declined two basis points to 4.50% The yield on 2-year Treasuries declined one basis point to 3.51% The yield on 30-year Treasuries was little changed at 4.85% Commodities

West Texas Intermediate crude fell 1.5% to $56.59 a barrel Spot gold was little changed ©2025 Bloomberg L.P.