State of Market: Midday 12/16/25
Midday Market Check: Stocks Slip as Energy and Health Care Lag; Bonds Bid While Crypto Advances
Rotation themes and policy headlines collide with softer macro surveys; long-end yields remain elevated as investors digest sector-specific news from pharma, AI software, EVs and cannabis.
TendieTensor.com State of Market Midday
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Equities are lower at midday Tuesday, with weakness broad-based but most acute in small caps, health care and energy, while bonds catch a modest bid and crypto extends its recent strength. The tone reflects a mix of macro and sector drivers: a soft December activity read, anchored inflation expectations, lingering uncertainty around tariffs and the Fed’s leadership, and a series of company and thematic developments across AI infrastructure and software, pharmaceuticals, EV strategy shifts, and cannabis policy.
Major indexes: breadth is negative and the bias slightly defensive. The SPDR S&P 500 ETF Trust (SPY) trades at 675.64 versus a previous close of 680.73, down about 0.75% midday. The Invesco QQQ Trust (QQQ) is at 607.66 against 610.54 prior, off 0.47%. The SPDR Dow Jones Industrial Average ETF (DIA) sits at 480.97 versus 485.17, down 0.87%. Small caps underperform: the iShares Russell 2000 ETF (IWM) is at 249.06 versus 251.93, down roughly 1.14%.
Macro backdrop and rates: Treasury yields remain elevated on the long end, with a modest inversion on the front end. The latest available curve levels show the 2-year at 3.52%, 5-year at 3.75%, 10-year at 4.19% and 30-year at 4.85%, with very short tenors at 1-month 3.76% and 3-month 3.63%, and the 1-year at 3.54%. This configuration points to a still-restrictive front end relative to the 1-year, a higher term premium over the belly, and a steeper long end that can be a headwind for duration-sensitive equities and capital-intensive sectors.
On inflation, the latest reported CPI index (September) is 324.368 with core CPI at 330.542. While these are index levels and not directly comparable to a year-over-year rate without additional data, market-based inflation expectations remain anchored: five-year at 2.35% and 10-year at 2.27%, with the five-to-ten-year forward implied in the mid-2% range. Reinforcing this, two Fed officials—Governor Stephen Miran and New York Fed President John Williams—indicated they are not worried about inflation going forward, according to reporting today. That messaging dovetails with commentary that the Fed’s recent easing stance—described as a “dovish version of a hawkish cut” by Jeremy Siegel—could shift market leadership toward areas more sensitive to lower short rates and improved funding conditions. At the same time, an S&P survey cited softer sales, tariff-linked price pressures, and hiring restraint weighing on December activity—adding nuance to the growth outlook as investors balance disinflation tailwinds with signs of demand moderation.
Equities and sectors: Sector performance tilts defensive-to-mixed, with clear laggards in health care and energy, and softer prints in tech and financials.
- Health care: The Health Care Select Sector SPDR (XLV) is at 153.15 versus 156.10, down 1.89%. The softer tone arrives as investors process a mix of pharma headlines. Pfizer (PFE) revised its 2025 revenue outlook to $62 billion and a CNBC piece characterized its 2026 outlook as modest, suggesting a longer runway for pipeline and deal synergies to inflect. Separately, Sanofi (SNY) shares slumped Monday on setbacks in a multiple-sclerosis drug program. The combination of tempered near-term growth narratives and pipeline risk highlights why the sector is lagging today.
- Energy: The Energy Select Sector SPDR (XLE) trades at 42.79 versus 43.22, down about 1.00%. Commodity inputs are a headwind at midday: U.S. Oil Fund (USO) is 66.50 versus 67.89, down 2.05%, and U.S. Natural Gas Fund (UNG) is 12.07 versus 12.46, down 3.13%. Broader commodities (DBC) are also lower at 22.59 versus 22.81, down 0.96%. Within the space, Ford’s (F) reorientation toward hybrids and battery energy storage—framed as “taking a page out of Tesla’s book”—underscores a shifting demand mix in the EV ecosystem, even as oil/gas price weakness dominates today’s tape.
- Technology: The Technology Select Sector SPDR (XLK) is 141.63 versus 142.30, down 0.47%. Under the hood, AI-related narratives remain two-sided. An HSBC view highlighted in MarketWatch points to software (including Oracle, ORCL) as a potential next leg of the AI trade into 2026, but recent reports emphasize investor concern over Oracle’s AI financing plans and more acquisitive risk at ServiceNow (NOW), with a separate item noting ServiceNow’s stock was sinking toward its worst day in 11 months. Meanwhile, Broadcom (AVGO) has weathered its worst three-day slide since 2020 even as it remains on some top-pick lists, and a lone Nvidia (NVDA) bear reiterated caution looking out to 2026. Taken together, positioning appears to be rotating within AI from hardware champions toward selective software names, with leadership transitions still fluid.
- Financials: The Financial Select Sector SPDR (XLF) is 54.60 versus 54.99, down 0.72%. Lower short rates should be balance-sheet supportive over time, as Siegel notes, but near-term trading mirrors the broader risk-off tone in equities and residual growth concerns from the December survey.
Bonds: Treasuries are bid, modestly, across the curve proxy ETFs. The iShares 20+ Year Treasury Bond ETF (TLT) is 87.70 versus 87.40, up 0.34%. The iShares 7–10 Year (IEF) is 96.47 versus 96.27, up 0.21%. The iShares 1–3 Year (SHY) is 82.97 versus 82.92, up 0.05%. This price firming is consistent with the messaging around contained inflation expectations and the idea that some softening in activity is emerging at year-end. The yield curve levels above still leave the long end relatively elevated, so duration remains a source of volatility; nevertheless, today’s uptick in price suggests demand for duration as equities ease.
Commodities: The complex is broadly softer. USO is down 2.05% and UNG down 3.13% versus prior closes, driving XLE underperformance. The Invesco DB Commodity Index (DBC) is lower by 0.96%, signaling broad pressure beyond energy. Precious metals are mixed-to-softer: SPDR Gold Shares (GLD) is essentially flat at 395.57 versus 395.80, down 0.06%, while iShares Silver Trust (SLV) is 57.51 versus 58.11, down 1.04%. While one feature today highlights arguments to treat copper more like a precious metal given its dual monetary/industrial characteristics, copper-specific pricing was not provided in this dataset.
FX and crypto: The EURUSD pair marks around 1.1747; no comparative change metrics are included in the feed, limiting inference on direction. Crypto remains firm. Bitcoin (BTCUSD) is marked near 87,402 versus an open of about 85,805, up roughly 1.86% intraday, with a reported high near 88,172 and low near 85,785. Ether (ETHUSD) is near 2,929 versus a 2,917 open, up about 0.40%, with a high around 2,982 and low near 2,885. The resilience here tracks with ongoing adoption narratives, including pieces about crypto’s inclusion in 401(k)s (albeit with caveats) and gift interest among younger cohorts—data points that speak to a widening retail footprint even as regulatory and plan-sponsor gatekeeping still shape access.
Notable company and policy narratives:
- AI and data centers: J.P. Morgan’s top-picks list keeps select semis in focus, even as Broadcom’s recent slide and a short-seller’s renewed bet against data centers highlight valuation tension and the risk of “dot-com 2.0” dynamics in parts of the infrastructure stack. Another view posits 2026 as a year of leadership transition from hardware to software, with Oracle among candidates—tempered by near-term funding concerns and governance of AI spending plans.
- Software M&A risk: ServiceNow’s stock pressure tied to fears of increased acquisitiveness illustrates how growth narratives can backfire if investors perceive dilution or a reach for incremental TAM at the expense of returns.
- EVs and energy storage: Ford’s strategic pivot toward hybrids and energy storage seeks to align with realized demand and the economics of grid-scale storage—an area that has been a profit pool for Tesla (TSLA). The market reaction to Ford’s nearly $20 billion charge was remarkably steady, suggesting investors had priced in significant EV challenges, though the broader energy complex is weighing on sector ETFs today.
- Pharma: Pfizer’s guidance reset and timeline for investment payoffs, alongside Sanofi’s MS program setbacks, weigh on sentiment and help explain the underperformance in XLV versus the tape.
- Cannabis: U.S. and Canadian cannabis stocks have rallied on headlines that President Trump is “very strongly” weighing an executive order to reschedule cannabis. Tilray (TLRY) was specifically cited as surging on hopes for a less stringent classification (more like steroids than heroin), a development with potential regulatory and capital access implications for the group.
- Media/telecom: Sirius XM (SIRI) extended its pact with Howard Stern, underlining the enduring value of marquee content even with a smaller audience than in prior peaks.
- Fed and policy watch: Political developments continue to filter into the macro outlook. Reports suggest Kevin Warsh’s odds for the Fed chair have risen, with separate comments asserting the White House should be consulted on rates. Meanwhile, a Supreme Court timeline on tariff rulings remains uncertain; tariffs were cited in S&P’s December activity softness, indicating this remains a live macro risk channel.
Outlook: Into the afternoon and the remainder of the week, investors will weigh a crowded calendar of data and micro catalysts. CNBC highlighted upcoming earnings from FedEx (FDX) and Jabil (JBL), which will serve as timely reads on global logistics demand and tech manufacturing visibility, respectively. On the macro side, labor-market data has been characterized as messy and hard to interpret—so the focus should remain on the interplay of wages, hours worked, and revisions rather than any single headline figure. With inflation expectations anchored near the Fed’s target zone and some survey softness emerging, rate-path expectations could remain sensitive to any surprises in activity or prices.
Positioning and flows are also a consideration. A recent survey flagged record-low cash balances among fund managers and the highest bullish sentiment in roughly four years. That backdrop can amplify volatility if earnings or policy headlines disappoint, particularly in crowded themes. The AI complex remains bifurcated: there is support for selective software re-rating into 2026, but skepticism about data center economics and capital intensity is also building. Leadership rotations—toward value, small caps, or cyclicals—have been cited post the Fed’s easing stance, but today’s price action shows that rotation remains tactical and data-dependent.
Risks: Key near-term risks include policy uncertainty (Fed leadership decisions and communications cadence), trade/tariff outcomes and their effect on input costs and demand, continued dispersion in AI-related equities (valuation risk in hardware and potential for software M&A missteps), health care pipeline risk, and commodity volatility (particularly energy) that can shift sector leadership quickly. A highly bullish positioning backdrop with low cash is an additional vulnerability if fundamentals wobble.
Bottom line: At midday, stocks are lower with cyclical and policy-sensitive sectors lagging, bonds are modestly firmer as inflation expectations remain contained and activity data softens at the margin, commodities are broadly under pressure led by energy, and crypto is higher. The next direction likely hinges on incoming corporate updates from logistics and tech supply chains, policy clarity around the Fed and tariffs, and whether rotation within AI can broaden leadership beyond recent winners without unsettling overall risk appetite.
Equities are lower at midday Tuesday, with weakness broad-based but most acute in small caps, health care and energy, while bonds catch a modest bid and crypto extends its recent strength. The tone reflects a mix of macro and sector drivers: a soft December activity read, anchored inflation expectations, lingering uncertainty around tariffs and the Fed’s leadership, and a series of company and thematic developments across AI infrastructure and software, pharmaceuticals, EV strategy shifts, and cannabis policy.
Major indexes: breadth is negative and the bias slightly defensive. The SPDR S&P 500 ETF Trust (SPY) trades at 675.64 versus a previous close of 680.73, down about 0.75% midday. The Invesco QQQ Trust (QQQ) is at 607.66 against 610.54 prior, off 0.47%. The SPDR Dow Jones Industrial Average ETF (DIA) sits at 480.97 versus 485.17, down 0.87%. Small caps underperform: the iShares Russell 2000 ETF (IWM) is at 249.06 versus 251.93, down roughly 1.14%.
Macro backdrop and rates: Treasury yields remain elevated on the long end, with a modest inversion on the front end. The latest available curve levels show the 2-year at 3.52%, 5-year at 3.75%, 10-year at 4.19% and 30-year at 4.85%, with very short tenors at 1-month 3.76% and 3-month 3.63%, and the 1-year at 3.54%. This configuration points to a still-restrictive front end relative to the 1-year, a higher term premium over the belly, and a steeper long end that can be a headwind for duration-sensitive equities and capital-intensive sectors.
On inflation, the latest reported CPI index (September) is 324.368 with core CPI at 330.542. While these are index levels and not directly comparable to a year-over-year rate without additional data, market-based inflation expectations remain anchored: five-year at 2.35% and 10-year at 2.27%, with the five-to-ten-year forward implied in the mid-2% range. Reinforcing this, two Fed officials—Governor Stephen Miran and New York Fed President John Williams—indicated they are not worried about inflation going forward, according to reporting today. That messaging dovetails with commentary that the Fed’s recent easing stance—described as a “dovish version of a hawkish cut” by Jeremy Siegel—could shift market leadership toward areas more sensitive to lower short rates and improved funding conditions. At the same time, an S&P survey cited softer sales, tariff-linked price pressures, and hiring restraint weighing on December activity—adding nuance to the growth outlook as investors balance disinflation tailwinds with signs of demand moderation.
Equities and sectors: Sector performance tilts defensive-to-mixed, with clear laggards in health care and energy, and softer prints in tech and financials.
- Health care: The Health Care Select Sector SPDR (XLV) is at 153.15 versus 156.10, down 1.89%. The softer tone arrives as investors process a mix of pharma headlines. Pfizer (PFE) revised its 2025 revenue outlook to $62 billion and a CNBC piece characterized its 2026 outlook as modest, suggesting a longer runway for pipeline and deal synergies to inflect. Separately, Sanofi (SNY) shares slumped Monday on setbacks in a multiple-sclerosis drug program. The combination of tempered near-term growth narratives and pipeline risk highlights why the sector is lagging today.
- Energy: The Energy Select Sector SPDR (XLE) trades at 42.79 versus 43.22, down about 1.00%. Commodity inputs are a headwind at midday: U.S. Oil Fund (USO) is 66.50 versus 67.89, down 2.05%, and U.S. Natural Gas Fund (UNG) is 12.07 versus 12.46, down 3.13%. Broader commodities (DBC) are also lower at 22.59 versus 22.81, down 0.96%. Within the space, Ford’s (F) reorientation toward hybrids and battery energy storage—framed as “taking a page out of Tesla’s book”—underscores a shifting demand mix in the EV ecosystem, even as oil/gas price weakness dominates today’s tape.
- Technology: The Technology Select Sector SPDR (XLK) is 141.63 versus 142.30, down 0.47%. Under the hood, AI-related narratives remain two-sided. An HSBC view highlighted in MarketWatch points to software (including Oracle, ORCL) as a potential next leg of the AI trade into 2026, but recent reports emphasize investor concern over Oracle’s AI financing plans and more acquisitive risk at ServiceNow (NOW), with a separate item noting ServiceNow’s stock was sinking toward its worst day in 11 months. Meanwhile, Broadcom (AVGO) has weathered its worst three-day slide since 2020 even as it remains on some top-pick lists, and a lone Nvidia (NVDA) bear reiterated caution looking out to 2026. Taken together, positioning appears to be rotating within AI from hardware champions toward selective software names, with leadership transitions still fluid.
- Financials: The Financial Select Sector SPDR (XLF) is 54.60 versus 54.99, down 0.72%. Lower short rates should be balance-sheet supportive over time, as Siegel notes, but near-term trading mirrors the broader risk-off tone in equities and residual growth concerns from the December survey.
Bonds: Treasuries are bid, modestly, across the curve proxy ETFs. The iShares 20+ Year Treasury Bond ETF (TLT) is 87.70 versus 87.40, up 0.34%. The iShares 7–10 Year (IEF) is 96.47 versus 96.27, up 0.21%. The iShares 1–3 Year (SHY) is 82.97 versus 82.92, up 0.05%. This price firming is consistent with the messaging around contained inflation expectations and the idea that some softening in activity is emerging at year-end. The yield curve levels above still leave the long end relatively elevated, so duration remains a source of volatility; nevertheless, today’s uptick in price suggests demand for duration as equities ease.
Commodities: The complex is broadly softer. USO is down 2.05% and UNG down 3.13% versus prior closes, driving XLE underperformance. The Invesco DB Commodity Index (DBC) is lower by 0.96%, signaling broad pressure beyond energy. Precious metals are mixed-to-softer: SPDR Gold Shares (GLD) is essentially flat at 395.57 versus 395.80, down 0.06%, while iShares Silver Trust (SLV) is 57.51 versus 58.11, down 1.04%. While one feature today highlights arguments to treat copper more like a precious metal given its dual monetary/industrial characteristics, copper-specific pricing was not provided in this dataset.
FX and crypto: The EURUSD pair marks around 1.1747; no comparative change metrics are included in the feed, limiting inference on direction. Crypto remains firm. Bitcoin (BTCUSD) is marked near 87,402 versus an open of about 85,805, up roughly 1.86% intraday, with a reported high near 88,172 and low near 85,785. Ether (ETHUSD) is near 2,929 versus a 2,917 open, up about 0.40%, with a high around 2,982 and low near 2,885. The resilience here tracks with ongoing adoption narratives, including pieces about crypto’s inclusion in 401(k)s (albeit with caveats) and gift interest among younger cohorts—data points that speak to a widening retail footprint even as regulatory and plan-sponsor gatekeeping still shape access.
Notable company and policy narratives:
- AI and data centers: J.P. Morgan’s top-picks list keeps select semis in focus, even as Broadcom’s recent slide and a short-seller’s renewed bet against data centers highlight valuation tension and the risk of “dot-com 2.0” dynamics in parts of the infrastructure stack. Another view posits 2026 as a year of leadership transition from hardware to software, with Oracle among candidates—tempered by near-term funding concerns and governance of AI spending plans.
- Software M&A risk: ServiceNow’s stock pressure tied to fears of increased acquisitiveness illustrates how growth narratives can backfire if investors perceive dilution or a reach for incremental TAM at the expense of returns.
- EVs and energy storage: Ford’s strategic pivot toward hybrids and energy storage seeks to align with realized demand and the economics of grid-scale storage—an area that has been a profit pool for Tesla (TSLA). The market reaction to Ford’s nearly $20 billion charge was remarkably steady, suggesting investors had priced in significant EV challenges, though the broader energy complex is weighing on sector ETFs today.
- Pharma: Pfizer’s guidance reset and timeline for investment payoffs, alongside Sanofi’s MS program setbacks, weigh on sentiment and help explain the underperformance in XLV versus the tape.
- Cannabis: U.S. and Canadian cannabis stocks have rallied on headlines that President Trump is “very strongly” weighing an executive order to reschedule cannabis. Tilray (TLRY) was specifically cited as surging on hopes for a less stringent classification (more like steroids than heroin), a development with potential regulatory and capital access implications for the group.
- Media/telecom: Sirius XM (SIRI) extended its pact with Howard Stern, underlining the enduring value of marquee content even with a smaller audience than in prior peaks.
- Fed and policy watch: Political developments continue to filter into the macro outlook. Reports suggest Kevin Warsh’s odds for the Fed chair have risen, with separate comments asserting the White House should be consulted on rates. Meanwhile, a Supreme Court timeline on tariff rulings remains uncertain; tariffs were cited in S&P’s December activity softness, indicating this remains a live macro risk channel.
Outlook: Into the afternoon and the remainder of the week, investors will weigh a crowded calendar of data and micro catalysts. CNBC highlighted upcoming earnings from FedEx (FDX) and Jabil (JBL), which will serve as timely reads on global logistics demand and tech manufacturing visibility, respectively. On the macro side, labor-market data has been characterized as messy and hard to interpret—so the focus should remain on the interplay of wages, hours worked, and revisions rather than any single headline figure. With inflation expectations anchored near the Fed’s target zone and some survey softness emerging, rate-path expectations could remain sensitive to any surprises in activity or prices.
Positioning and flows are also a consideration. A recent survey flagged record-low cash balances among fund managers and the highest bullish sentiment in roughly four years. That backdrop can amplify volatility if earnings or policy headlines disappoint, particularly in crowded themes. The AI complex remains bifurcated: there is support for selective software re-rating into 2026, but skepticism about data center economics and capital intensity is also building. Leadership rotations—toward value, small caps, or cyclicals—have been cited post the Fed’s easing stance, but today’s price action shows that rotation remains tactical and data-dependent.
Risks: Key near-term risks include policy uncertainty (Fed leadership decisions and communications cadence), trade/tariff outcomes and their effect on input costs and demand, continued dispersion in AI-related equities (valuation risk in hardware and potential for software M&A missteps), health care pipeline risk, and commodity volatility (particularly energy) that can shift sector leadership quickly. A highly bullish positioning backdrop with low cash is an additional vulnerability if fundamentals wobble.
Bottom line: At midday, stocks are lower with cyclical and policy-sensitive sectors lagging, bonds are modestly firmer as inflation expectations remain contained and activity data softens at the margin, commodities are broadly under pressure led by energy, and crypto is higher. The next direction likely hinges on incoming corporate updates from logistics and tech supply chains, policy clarity around the Fed and tariffs, and whether rotation within AI can broaden leadership beyond recent winners without unsettling overall risk appetite.