State of Market: Midday 12/22/25
Stocks grind higher into the holiday week as small caps lead; gold shines, utilities lag
Lower Treasury ETFs and a softer dollar frame a risk-on tone, while headlines spotlight defense, AI, cannabis, and select mega-cap stories
TendieTensor.com State of Market Midday
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Markets are leaning risk-on at midday Monday, with gains broad enough to include cyclicals and small caps as investors look to extend December’s nascent rebound into the holiday-shortened week. The move is unfolding against a macro backdrop of moderate Treasury yields, anchored long-term inflation expectations, and a dollar that is softer versus the euro. Commodities are mixed, with crude stronger, natural gas weaker, and precious metals continuing to catch a bid. Meanwhile, a steady drumbeat of company-specific headlines spans defense, AI infrastructure, cannabis reclassification, and selective consumer and cloud stories.
Equities overview
At 1:30 p.m. ET, the S&P 500 tracker SPY is trading at 684.75, up from its prior close of 680.59, with the Nasdaq-100 proxy QQQ at 619.205 versus 617.05 on Friday. The Dow proxy DIA prints 483.78 against 481.15 previously, while small caps lead: IWM trades at 254.405, up from 250.79. In percentage terms, that puts SPY and DIA modestly higher, QQQ up slightly, and IWM out in front with an advance of roughly the mid–single digits in dollar terms from the prior close. The pattern is consistent with an appetite to rotate beyond the mega-cap core into more domestically sensitive and rate-levered parts of the market.
The sector tape is mixed to positive among the segments we can observe. Financials (XLF 55.38 vs. 54.84) are firm midday, aligning with recent commentary that bank stocks have earned upward revisions to price targets after strong runs. Technology is a mild positive (XLK 145.09 vs. 144.60), while Health Care is fractionally higher (XLV 155.15 vs. 154.94). Utilities, by contrast, are offered: the utilities ETF (symbol XLU in the provided data) trades at 42.35 versus 42.63 previously. The underperformance in defensives alongside strength in cyclicals and small caps fits a pro-cyclical, risk-on session tone.
Macro: yields, inflation, expectations
Treasury yields, as of the latest available print from December 18, show a 2-year at 3.46%, 5-year at 3.66%, 10-year at 4.12%, and 30-year at 4.80%. The curve remains positively sloped from 2s to 10s, and even more to 30s, with term premium evident at the long end. In ETFs, duration is slightly pressured midday: TLT is down (87.29 vs. 87.55 prior), IEF is a touch lower (96.095 vs. 96.24), and SHY is fractionally soft (82.715 vs. 82.76). The drift lower in Treasury ETFs is consistent with a modest back-up in yields or a giveback after recent strength.
Inflation data for November put CPI at 325.031 and core CPI at 331.068 (index levels). Importantly, inflation expectations embedded in the provided model remain anchored: 1-year at about 3.20% reflects lingering near-term price pressures, but 5-year (2.42%), 10-year (2.34%), and 30-year (2.44%) are clustered close to the low-to-mid 2s, a range broadly compatible with a path back toward price stability over the medium term. That said, New York Fed President John Williams flagged that “technical factors” likely distorted the November CPI reading lower, tempering any overly dovish interpretations of that single print. Against this, MarketWatch notes GDP resilience despite a turbulent year of tariffs, inflation and higher unemployment, suggesting real activity has been more durable than feared. Housing is showing tentative reacceleration, with existing home sales rising for a third month in November to a nine-month high, a sign that easing mortgage frictions and seller capitulation may be thawing supply-demand dynamics.
Equities and sectors: positioning into year-end
Today’s leadership from IWM underscores the sensitivity of smaller, domestically oriented businesses to the rate and growth mix. Financials’ strength (XLF) dovetails with a backdrop of stabilized credit conditions and steeper long rates versus the front end relative to midyear. Technology (XLK) is participating but not dominating, in line with recent commentary that, as the rally broadens, it becomes more difficult for the S&P 500 to advance without Big Tech as a primary engine. Health care (XLV) is quietly constructive, while Utilities (XLU) are weaker—a typical pattern when investors reach for cyclicality and higher-beta exposure.
Company and thematic headlines are textured. Defense is in focus as MarketWatch highlights Huntington Ingalls Industries winning the U.S. Navy’s new small-frigate contract, with shares “soaring to a fresh record.” In industrials, Honeywell disclosed a $470 million one-time cash settlement related to the Flexjet lawsuit and lowered its profit outlook; the stock fell on the headline. FedEx continues to telegraph operational improvement, with management guiding for more profit as a key business turns around and characterizing the company as a heartbeat for the industrial economy.
AI infrastructure remains a central market narrative. Micron’s recent “Nvidia moment” on a dramatic beat has analysts upbeat on its leverage to the AI cycle. Separate commentary notes Nvidia remains a battleground—yet with supportive arguments that bear cases may be overstated and discussions of the name as “unusually cheap” relative to history. A CNBC note suggests that if OpenAI raises capital, it could help re-energize data center stocks. The broader takeaway is that AI remains cyclical and capital-intense, with the near-term trade path potentially choppy despite long-run demand clarity. Oracle is another beneficiary of AI-adjacent cloud infrastructure, with MarketWatch citing a rise in ORCL on reports that TikTok’s U.S. joint venture would rely on Oracle Cloud.
Policy and regulatory shifts are moving discrete pockets of the market. Marijuana stocks are jumping as reports point to a forthcoming executive order to reclassify cannabis, with Tilray and Canopy Growth among notable gainers. In space and defense-adjacent tech, Rocket Lab’s stock is surging toward a new high after completing a government contract ahead of schedule and winning another, per MarketWatch.
Commodities: precious metals firm, crude higher, gas lower
Gold and silver are firm. GLD trades around 407.88 versus 399.02 on Friday, while SLV prints 62.17 versus 60.93. MarketWatch frames the move within a revived “great debasement trade,” with geopolitical risk and inflation hedge demand supporting precious metals. With longer-dated inflation expectations anchored, the immediate driver looks more like geopolitical and portfolio hedge rebalancing than a wholesale un-anchoring of long-run inflation views. Still, President Williams’ caution on CPI “technical factors” argues for humility around inflation trajectory, which can also underpin gold as a hedge.
Energy is mixed within the commodity complex. USO is firmer at 69.62 from 68.03, consistent with CNBC’s note that crude is steady after comments that did not rule out conflict with Venezuela. By contrast, diversified commodity tracker DBC is lower at 22.37 versus 22.85, a reminder that cross-commodity performance can diverge. Natural gas remains under pressure: UNG is down sharply to 11.61 from 12.19, reflecting ongoing supply dynamics and shoulder-season softness.
FX and crypto: dollar softer vs. euro; crypto mixed with a bullish headline backdrop
The euro is stronger against the dollar midday: EURUSD’s mark around 1.1752 is above its session open of roughly 1.1720, indicating a softer dollar. A weaker dollar tends to be supportive of risk assets, commodities priced in USD, and U.S. multinational earnings translation, though the effects unfold with a lag.
In digital assets, Bitcoin’s mark near 89,472 sits modestly above its session open, with an intraday range between roughly 88,701 and 90,566. Ether is slightly softer on the day around 3,034 versus an open near 3,039, after touching a session high above 3,077. Sentiment-wise, MarketWatch cites a Wall Street forecast that Bitcoin could reach 143,000 next year amid ongoing ETF-driven adoption. While forecasts are not price action, the persistence of institutional narratives provides a supportive medium-term framing, even as token prices consolidate within recent ranges.
Positioning and flows: year-end considerations
As the week begins, several articles frame the seasonal and flow backdrop. MarketWatch notes investors are still eyeing a potential “Santa Claus rally,” and another piece argues not to give up on that prospect despite a rough start to December. At the same time, Bank of America’s flow-based “sell signal” is flagged as a historical caution for larger pullbacks when participation broadens significantly. A Deutsche Bank survey highlights what investors view as the more material risks into 2026, and Morgan Stanley outlines potential macro surprises that could challenge consensus next year. The combination argues for selective risk-taking: lean into breadth and cyclicality when the macro tape supports it, but respect risk controls given how elevated positioning pockets can amplify reversals.
What’s next
From a macro standpoint, watch the interaction between long-end yields and equity breadth. The current mix—anchored long-term inflation expectations, modestly softer dollar, and a still-resilient growth pulse—supports a constructive near-term equity stance with room for pro-cyclical leadership. Within commodities, watch whether crude’s firmness persists and whether natural gas finds a seasonal floor. In crypto, monitor whether Bitcoin can sustain a series of higher lows as ETF flows reassert into year-end. Company-specific catalysts remain active in defense, AI infrastructure, and select consumer names.
Key headlines shaping the midday tone include: GDP resilience despite a turbulent year; Honeywell’s one-off legal charge and outlook adjustment; Huntington Ingalls’ contract win; Oracle’s potential TikTok tailwind; Micron’s AI-linked surge; cannabis stocks’ jump on reclassification expectations; Rocket Lab’s contract momentum; FedEx’s improving profit outlook; and home sales’ gradual thaw. Together, they depict an economy that is more balanced beneath the surface—where weakness in some defensive pockets can coexist with strength in cyclicals, tech enablers, and rate-sensitive areas.
Bottom line: The market’s midday bias is upward, breadth is decent, and leadership tilts toward small caps and cyclicals. Utilities lag and long-duration bonds soften, consistent with a mild risk-on and slightly higher-rate tone. Precious metals are bid as geopolitical and hedging demand persists, while the dollar eases versus the euro. Into the final stretch of the year, the path of least resistance remains higher provided long-term rates stay contained and earnings revisions don’t deteriorate. But with a broadening rally and seasonal optimism come reminders to manage exposure, as flow signals and macro surprise risks can turn the tide quickly.
Markets are leaning risk-on at midday Monday, with gains broad enough to include cyclicals and small caps as investors look to extend December’s nascent rebound into the holiday-shortened week. The move is unfolding against a macro backdrop of moderate Treasury yields, anchored long-term inflation expectations, and a dollar that is softer versus the euro. Commodities are mixed, with crude stronger, natural gas weaker, and precious metals continuing to catch a bid. Meanwhile, a steady drumbeat of company-specific headlines spans defense, AI infrastructure, cannabis reclassification, and selective consumer and cloud stories.
Equities overview
At 1:30 p.m. ET, the S&P 500 tracker SPY is trading at 684.75, up from its prior close of 680.59, with the Nasdaq-100 proxy QQQ at 619.205 versus 617.05 on Friday. The Dow proxy DIA prints 483.78 against 481.15 previously, while small caps lead: IWM trades at 254.405, up from 250.79. In percentage terms, that puts SPY and DIA modestly higher, QQQ up slightly, and IWM out in front with an advance of roughly the mid–single digits in dollar terms from the prior close. The pattern is consistent with an appetite to rotate beyond the mega-cap core into more domestically sensitive and rate-levered parts of the market.
The sector tape is mixed to positive among the segments we can observe. Financials (XLF 55.38 vs. 54.84) are firm midday, aligning with recent commentary that bank stocks have earned upward revisions to price targets after strong runs. Technology is a mild positive (XLK 145.09 vs. 144.60), while Health Care is fractionally higher (XLV 155.15 vs. 154.94). Utilities, by contrast, are offered: the utilities ETF (symbol XLU in the provided data) trades at 42.35 versus 42.63 previously. The underperformance in defensives alongside strength in cyclicals and small caps fits a pro-cyclical, risk-on session tone.
Macro: yields, inflation, expectations
Treasury yields, as of the latest available print from December 18, show a 2-year at 3.46%, 5-year at 3.66%, 10-year at 4.12%, and 30-year at 4.80%. The curve remains positively sloped from 2s to 10s, and even more to 30s, with term premium evident at the long end. In ETFs, duration is slightly pressured midday: TLT is down (87.29 vs. 87.55 prior), IEF is a touch lower (96.095 vs. 96.24), and SHY is fractionally soft (82.715 vs. 82.76). The drift lower in Treasury ETFs is consistent with a modest back-up in yields or a giveback after recent strength.
Inflation data for November put CPI at 325.031 and core CPI at 331.068 (index levels). Importantly, inflation expectations embedded in the provided model remain anchored: 1-year at about 3.20% reflects lingering near-term price pressures, but 5-year (2.42%), 10-year (2.34%), and 30-year (2.44%) are clustered close to the low-to-mid 2s, a range broadly compatible with a path back toward price stability over the medium term. That said, New York Fed President John Williams flagged that “technical factors” likely distorted the November CPI reading lower, tempering any overly dovish interpretations of that single print. Against this, MarketWatch notes GDP resilience despite a turbulent year of tariffs, inflation and higher unemployment, suggesting real activity has been more durable than feared. Housing is showing tentative reacceleration, with existing home sales rising for a third month in November to a nine-month high, a sign that easing mortgage frictions and seller capitulation may be thawing supply-demand dynamics.
Equities and sectors: positioning into year-end
Today’s leadership from IWM underscores the sensitivity of smaller, domestically oriented businesses to the rate and growth mix. Financials’ strength (XLF) dovetails with a backdrop of stabilized credit conditions and steeper long rates versus the front end relative to midyear. Technology (XLK) is participating but not dominating, in line with recent commentary that, as the rally broadens, it becomes more difficult for the S&P 500 to advance without Big Tech as a primary engine. Health care (XLV) is quietly constructive, while Utilities (XLU) are weaker—a typical pattern when investors reach for cyclicality and higher-beta exposure.
Company and thematic headlines are textured. Defense is in focus as MarketWatch highlights Huntington Ingalls Industries winning the U.S. Navy’s new small-frigate contract, with shares “soaring to a fresh record.” In industrials, Honeywell disclosed a $470 million one-time cash settlement related to the Flexjet lawsuit and lowered its profit outlook; the stock fell on the headline. FedEx continues to telegraph operational improvement, with management guiding for more profit as a key business turns around and characterizing the company as a heartbeat for the industrial economy.
AI infrastructure remains a central market narrative. Micron’s recent “Nvidia moment” on a dramatic beat has analysts upbeat on its leverage to the AI cycle. Separate commentary notes Nvidia remains a battleground—yet with supportive arguments that bear cases may be overstated and discussions of the name as “unusually cheap” relative to history. A CNBC note suggests that if OpenAI raises capital, it could help re-energize data center stocks. The broader takeaway is that AI remains cyclical and capital-intense, with the near-term trade path potentially choppy despite long-run demand clarity. Oracle is another beneficiary of AI-adjacent cloud infrastructure, with MarketWatch citing a rise in ORCL on reports that TikTok’s U.S. joint venture would rely on Oracle Cloud.
Policy and regulatory shifts are moving discrete pockets of the market. Marijuana stocks are jumping as reports point to a forthcoming executive order to reclassify cannabis, with Tilray and Canopy Growth among notable gainers. In space and defense-adjacent tech, Rocket Lab’s stock is surging toward a new high after completing a government contract ahead of schedule and winning another, per MarketWatch.
Commodities: precious metals firm, crude higher, gas lower
Gold and silver are firm. GLD trades around 407.88 versus 399.02 on Friday, while SLV prints 62.17 versus 60.93. MarketWatch frames the move within a revived “great debasement trade,” with geopolitical risk and inflation hedge demand supporting precious metals. With longer-dated inflation expectations anchored, the immediate driver looks more like geopolitical and portfolio hedge rebalancing than a wholesale un-anchoring of long-run inflation views. Still, President Williams’ caution on CPI “technical factors” argues for humility around inflation trajectory, which can also underpin gold as a hedge.
Energy is mixed within the commodity complex. USO is firmer at 69.62 from 68.03, consistent with CNBC’s note that crude is steady after comments that did not rule out conflict with Venezuela. By contrast, diversified commodity tracker DBC is lower at 22.37 versus 22.85, a reminder that cross-commodity performance can diverge. Natural gas remains under pressure: UNG is down sharply to 11.61 from 12.19, reflecting ongoing supply dynamics and shoulder-season softness.
FX and crypto: dollar softer vs. euro; crypto mixed with a bullish headline backdrop
The euro is stronger against the dollar midday: EURUSD’s mark around 1.1752 is above its session open of roughly 1.1720, indicating a softer dollar. A weaker dollar tends to be supportive of risk assets, commodities priced in USD, and U.S. multinational earnings translation, though the effects unfold with a lag.
In digital assets, Bitcoin’s mark near 89,472 sits modestly above its session open, with an intraday range between roughly 88,701 and 90,566. Ether is slightly softer on the day around 3,034 versus an open near 3,039, after touching a session high above 3,077. Sentiment-wise, MarketWatch cites a Wall Street forecast that Bitcoin could reach 143,000 next year amid ongoing ETF-driven adoption. While forecasts are not price action, the persistence of institutional narratives provides a supportive medium-term framing, even as token prices consolidate within recent ranges.
Positioning and flows: year-end considerations
As the week begins, several articles frame the seasonal and flow backdrop. MarketWatch notes investors are still eyeing a potential “Santa Claus rally,” and another piece argues not to give up on that prospect despite a rough start to December. At the same time, Bank of America’s flow-based “sell signal” is flagged as a historical caution for larger pullbacks when participation broadens significantly. A Deutsche Bank survey highlights what investors view as the more material risks into 2026, and Morgan Stanley outlines potential macro surprises that could challenge consensus next year. The combination argues for selective risk-taking: lean into breadth and cyclicality when the macro tape supports it, but respect risk controls given how elevated positioning pockets can amplify reversals.
What’s next
From a macro standpoint, watch the interaction between long-end yields and equity breadth. The current mix—anchored long-term inflation expectations, modestly softer dollar, and a still-resilient growth pulse—supports a constructive near-term equity stance with room for pro-cyclical leadership. Within commodities, watch whether crude’s firmness persists and whether natural gas finds a seasonal floor. In crypto, monitor whether Bitcoin can sustain a series of higher lows as ETF flows reassert into year-end. Company-specific catalysts remain active in defense, AI infrastructure, and select consumer names.
Key headlines shaping the midday tone include: GDP resilience despite a turbulent year; Honeywell’s one-off legal charge and outlook adjustment; Huntington Ingalls’ contract win; Oracle’s potential TikTok tailwind; Micron’s AI-linked surge; cannabis stocks’ jump on reclassification expectations; Rocket Lab’s contract momentum; FedEx’s improving profit outlook; and home sales’ gradual thaw. Together, they depict an economy that is more balanced beneath the surface—where weakness in some defensive pockets can coexist with strength in cyclicals, tech enablers, and rate-sensitive areas.
Bottom line: The market’s midday bias is upward, breadth is decent, and leadership tilts toward small caps and cyclicals. Utilities lag and long-duration bonds soften, consistent with a mild risk-on and slightly higher-rate tone. Precious metals are bid as geopolitical and hedging demand persists, while the dollar eases versus the euro. Into the final stretch of the year, the path of least resistance remains higher provided long-term rates stay contained and earnings revisions don’t deteriorate. But with a broadening rally and seasonal optimism come reminders to manage exposure, as flow signals and macro surprise risks can turn the tide quickly.