State of Market: Close 12/17/25
Tech-led selloff into the close as AI unwind meets steady long-end yields; metals and energy rebound
SPY and QQQ slipped with XLK under pressure amid AI-capex worries, while GLD, SLV, and broad commodities advanced. Treasury curve steady ahead of Thursday’s delayed CPI; crypto weak with Bitcoin hovering near $86,000.
TendieTensor.com State of Market Close
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Overview
U.S. equities finished lower on Wednesday in a session defined by renewed pressure on large-cap technology and AI-linked shares, offset in part by strength across commodities. The S&P 500 proxy SPY fell to 671.30 from a prior close of 678.87, a decline of roughly 1.1%. The Nasdaq-100 tracker QQQ underperformed, closing at 600.36 versus 611.75 yesterday, down about 1.9%, as investors rotated away from AI hardware and software beneficiaries. The Dow proxy DIA eased 0.5% to 479.77, and small caps (IWM) slipped about 1.1% to 247.20, indicating broad but not disorderly risk-off into the bell.
At the sector level, Technology (XLK) led declines, falling to 139.37 from 142.56 (-2.2%) on the back of several headlines pointing to AI-spending fatigue and data-center financing concerns. Financials (XLF) were essentially flat at 54.63 (-0.02%). Energy, as represented by the XLE data field provided (quote labeled as XLU), dipped 0.7% to 42.75 despite a supportive day for crude proxies. Healthcare (XLV) was modestly softer at 153.81 (-0.17%).
The macro backdrop was comparatively stable. Treasury yields were last available for December 15 and show a 10-year at 4.18% and 2-year at 3.51%, keeping the curve gently positive from front end to intermediate maturities, with the 30-year at 4.84%. Long-duration bond ETFs were little changed: TLT ended at 87.83 (-0.06%), IEF at 96.53 (-0.02%), and SHY at 82.98 (+0.02%). Inflation expectations remain anchored, with market-implied five- and ten-year inflation at 2.35% and 2.27%, respectively, and the five-year/five-year forward near 2.18%. The anticipated, delayed CPI release on Thursday looms as the next catalyst for policy expectations and rates volatility.
Macro section: rates, inflation, expectations
Treasury yield levels (as of 12/15) continue to suggest a modestly positive slope between 2-year (3.51%) and 10-year (4.18%), with the long bond at 4.84%. That configuration aligns with today’s relatively muted price action across the duration spectrum: the long-end proxy TLT was fractionally lower (-0.06%), the intermediate IEF was off by about 0.02%, and the short end (SHY) ticked up by roughly 0.02%. In other words, the rates complex provided neither a tailwind nor a major headwind for equities today; equity leadership and positioning did the heavy lifting.
On inflation, the most recent CPI and core CPI data provided (September) stand at 324.368 and 330.542, respectively. While those are effectively stale for trading purposes, the market’s forward-looking gauges are clearer: five-year breakevens near 2.35% and 10-year near 2.27% imply expectations remain within a range consistent with disinflation resuming over the medium term. That view was echoed in commentary reported today from a Federal Reserve chair finalist, who expects inflation to fall over the next few months and sees room for rate cuts at a moderate pace. That said, other Fed voices have flagged potential inflation risks into 2026, underscoring policy uncertainty beyond the immediate horizon. The upshot for asset allocation: a near-term glide path of stable-to-easing policy is still on the table, but incoming data—starting with Thursday’s delayed CPI—will be decisive.
Equities and sectors
- Broad indices: SPY closed at 671.30 (-1.1% vs. 678.87 prior). QQQ lagged at 600.36 (-1.9% vs. 611.75 prior), reinforcing that today’s pressure was tech-centric. DIA finished at 479.77 (-0.5% vs. 481.98), while IWM slipped to 247.20 (-1.1% vs. 249.90), showing that small caps moved largely in line with the broader S&P.
- Technology (XLK): The sector fell to 139.37 from 142.56 (-2.2%) amid a drumbeat of AI-related caution. Headlines highlighted sharp drops in key AI beneficiaries, including Nvidia and Broadcom, with concerns centering on data-center build financing and whether the pace of AI capex is sustainable. ServiceNow was also cited for weakness tied to fears of a more acquisitive posture to reignite growth. The combined narrative weighed on the complex and helped explain QQQ’s underperformance.
- Financials (XLF): Essentially unchanged at 54.63 (-0.02%). While not a leadership group today, stability here helped cushion broader market downside even as one-off news in consumer finance (e.g., price target changes for Capital One) captured attention.
- Energy (XLE data field provided; quote labeled XLU): Down 0.7% to 42.75 despite supportive commodity action (see below). The divergence from crude benchmarks may reflect lingering skepticism over the fundamental oil backdrop, with recent narratives pointing to abundant supply and prices tracking near five-year lows into year-end. Today’s crude bounce may need follow-through to shift equity sentiment in the group.
- Healthcare (XLV): Slight decline to 153.81 (-0.17%), an island of relative calm versus tech. Rotations within growth—such as strength in select large-cap pharma versus high-beta AI hardware—remain a theme, as recent coverage contrasted Eli Lilly’s relative outperformance versus certain mega-cap tech over the past few weeks.
Bonds
Bond ETFs were nearly flat, consistent with minimal net change in the provided Treasury benchmarks. TLT edged to 87.83 (-0.06%), IEF to 96.53 (-0.02%), and SHY to 82.98 (+0.02%). The 10-year at 4.18% versus a 2-year at 3.51% leaves the intermediate belly still sensitive to any upside surprise in the delayed CPI. For now, fixed income did not provide a decisive signal, which left equity factor leadership and sector-specific narratives to drive index moves.
Commodities
- Precious metals: Strength was notable. GLD rose to 399.28 (+0.86% vs. 395.89 prior), while SLV surged to 60.27 (+4.4% vs. 57.73). This aligns with commentary that precious metals could continue to benefit in a late-cycle, policy-transition environment. Anchored inflation expectations alongside policy easing hopes can be constructive for gold, and silver’s higher beta was evident today.
- Energy: The oil proxy USO climbed to 67.97 (+2.7% vs. 66.17), and natural gas (UNG) advanced to 12.64 (+4.4% vs. 12.10). Broad commodities, via DBC, gained to 22.84 (+1.15%). The rebound comes against a year-to-date narrative of ample supply and soft prices. Follow-through will be important to test whether a durable floor is forming into year-end.
FX and crypto
The euro was quoted around 1.174 versus the dollar (EURUSD), putting the pair in the mid-1.17s. Without a directly comparable prior-day mark in the data, we simply note levels rather than a directional call. In digital assets, crypto traded heavy: Bitcoin’s mark price was 85,967, below its open for the session, and Bloomberg reported the token slipped under $86,000 while probing year-to-date lows. Ether tracked weaker at 2,826, down from its session open near 2,932 as crypto broadly underperformed risk assets that were already soft.
Notable news and movers
- AI/data-center complex under pressure: Reports pointed to an unwind in the crowded AI trade, with concerns about debt-funded buildouts at hyperscalers and partners. Nvidia and Broadcom were singled out for sharp declines, while Oracle faced fresh skepticism tied to data-center financing rumors—though some argue the fear is overdone. ServiceNow’s slide was pinned on worries it could lean more heavily on M&A to support growth.
- Policy and the Fed: A leading Fed chair candidate indicated inflation could fall over the next three to four months and suggested a path for moderate rate cuts. Separate coverage emphasized the importance of Fed independence. Together, these items leave a near-term easing narrative intact, even as other officials have flagged risks to inflation into 2026, highlighting a nontrivial policy spread for the later horizon.
- Commodities leadership: Precious metals gained on the day, consistent with recent research commentary anticipating a favorable window for gold and silver. Oil’s bounce contrasted with articles underscoring that 2025 has been a historic year for oversupply and weak prices; for equity investors in Energy, today’s divergence poses a question: was this a trading bounce or the start of stabilization?
- Primary markets: Medical supplier Medline’s IPO priced at $29 per share, raising $6.26 billion—the largest U.S. listing of 2025—adding a constructive data point for equity capital markets as investors look toward 2026 issuance.
Outlook—what to watch next
- Thursday’s delayed CPI release is the next major macro input. With five- and ten-year inflation expectations anchored near 2.35% and 2.27%, a hotter-than-expected print could challenge the moderate-cuts narrative; a cooler number would reinforce it. Rates sensitivity should be highest in the belly of the curve and in rate-proxy equities.
- AI-spending cadence and financing tone: Headlines today focused on data-center capex sustainability. Watch how enterprise software names and hyperscaler suppliers guide on 2026 spending, and whether financing conditions tighten.
- Leadership rotation: If Tech (XLK) remains soft, monitor whether Healthcare (XLV), Financials (XLF), and commodity-linked equities can absorb leadership. Today’s divergence—metals up, Energy equities down—bears watching for confirmation or mean reversion.
- Crypto near support: Bitcoin hovering around $86,000 will keep the space in focus. A decisive break lower could spill over into broader risk sentiment at the margin.
- Primary issuance: Medline’s debut provides a gauge for investor appetite into year-end; follow the after-market trading to infer conditions for early-2026 listings.
Risks
- Policy path ambiguity: Mixed Fed messaging on the 2026 outlook creates tail risk for duration and duration-sensitive equities.
- AI-capex normalization: If data-center financing conditions or ROI hurdles bite, earnings revisions in AI hardware/software ecosystems could accelerate.
- Macro growth slippage: Recent business surveys pointed to tariff- and inflation-related demand softness; a weak CPI/PPI mix could morph into margin pressure if pricing power fades faster than input costs.
- Positioning/flows: With risk appetite elevated earlier in the quarter, any negative macro surprise could meet thin year-end liquidity.
- Commodity volatility: Oil and gas rebalancing, and precious metals momentum, could increase cross-asset correlation and intraday swings if macro data surprise.
Bottom line
Today’s close featured a tech-led pullback within an otherwise steady macro-rate environment. With SPY down about 1.1% and QQQ off 1.9%, the story was sector leadership and a reassessment of the AI spend trajectory, not a rates shock. Fixed income was effectively flat, while commodities—especially precious metals—provided ballast. The next decisive input is Thursday’s CPI. Until then, focus remains on the durability of AI-related capital spending, the breadth of leadership outside mega-cap tech, and whether commodities can sustain their bid into year-end.
Overview
U.S. equities finished lower on Wednesday in a session defined by renewed pressure on large-cap technology and AI-linked shares, offset in part by strength across commodities. The S&P 500 proxy SPY fell to 671.30 from a prior close of 678.87, a decline of roughly 1.1%. The Nasdaq-100 tracker QQQ underperformed, closing at 600.36 versus 611.75 yesterday, down about 1.9%, as investors rotated away from AI hardware and software beneficiaries. The Dow proxy DIA eased 0.5% to 479.77, and small caps (IWM) slipped about 1.1% to 247.20, indicating broad but not disorderly risk-off into the bell.
At the sector level, Technology (XLK) led declines, falling to 139.37 from 142.56 (-2.2%) on the back of several headlines pointing to AI-spending fatigue and data-center financing concerns. Financials (XLF) were essentially flat at 54.63 (-0.02%). Energy, as represented by the XLE data field provided (quote labeled as XLU), dipped 0.7% to 42.75 despite a supportive day for crude proxies. Healthcare (XLV) was modestly softer at 153.81 (-0.17%).
The macro backdrop was comparatively stable. Treasury yields were last available for December 15 and show a 10-year at 4.18% and 2-year at 3.51%, keeping the curve gently positive from front end to intermediate maturities, with the 30-year at 4.84%. Long-duration bond ETFs were little changed: TLT ended at 87.83 (-0.06%), IEF at 96.53 (-0.02%), and SHY at 82.98 (+0.02%). Inflation expectations remain anchored, with market-implied five- and ten-year inflation at 2.35% and 2.27%, respectively, and the five-year/five-year forward near 2.18%. The anticipated, delayed CPI release on Thursday looms as the next catalyst for policy expectations and rates volatility.
Macro section: rates, inflation, expectations
Treasury yield levels (as of 12/15) continue to suggest a modestly positive slope between 2-year (3.51%) and 10-year (4.18%), with the long bond at 4.84%. That configuration aligns with today’s relatively muted price action across the duration spectrum: the long-end proxy TLT was fractionally lower (-0.06%), the intermediate IEF was off by about 0.02%, and the short end (SHY) ticked up by roughly 0.02%. In other words, the rates complex provided neither a tailwind nor a major headwind for equities today; equity leadership and positioning did the heavy lifting.
On inflation, the most recent CPI and core CPI data provided (September) stand at 324.368 and 330.542, respectively. While those are effectively stale for trading purposes, the market’s forward-looking gauges are clearer: five-year breakevens near 2.35% and 10-year near 2.27% imply expectations remain within a range consistent with disinflation resuming over the medium term. That view was echoed in commentary reported today from a Federal Reserve chair finalist, who expects inflation to fall over the next few months and sees room for rate cuts at a moderate pace. That said, other Fed voices have flagged potential inflation risks into 2026, underscoring policy uncertainty beyond the immediate horizon. The upshot for asset allocation: a near-term glide path of stable-to-easing policy is still on the table, but incoming data—starting with Thursday’s delayed CPI—will be decisive.
Equities and sectors
- Broad indices: SPY closed at 671.30 (-1.1% vs. 678.87 prior). QQQ lagged at 600.36 (-1.9% vs. 611.75 prior), reinforcing that today’s pressure was tech-centric. DIA finished at 479.77 (-0.5% vs. 481.98), while IWM slipped to 247.20 (-1.1% vs. 249.90), showing that small caps moved largely in line with the broader S&P.
- Technology (XLK): The sector fell to 139.37 from 142.56 (-2.2%) amid a drumbeat of AI-related caution. Headlines highlighted sharp drops in key AI beneficiaries, including Nvidia and Broadcom, with concerns centering on data-center build financing and whether the pace of AI capex is sustainable. ServiceNow was also cited for weakness tied to fears of a more acquisitive posture to reignite growth. The combined narrative weighed on the complex and helped explain QQQ’s underperformance.
- Financials (XLF): Essentially unchanged at 54.63 (-0.02%). While not a leadership group today, stability here helped cushion broader market downside even as one-off news in consumer finance (e.g., price target changes for Capital One) captured attention.
- Energy (XLE data field provided; quote labeled XLU): Down 0.7% to 42.75 despite supportive commodity action (see below). The divergence from crude benchmarks may reflect lingering skepticism over the fundamental oil backdrop, with recent narratives pointing to abundant supply and prices tracking near five-year lows into year-end. Today’s crude bounce may need follow-through to shift equity sentiment in the group.
- Healthcare (XLV): Slight decline to 153.81 (-0.17%), an island of relative calm versus tech. Rotations within growth—such as strength in select large-cap pharma versus high-beta AI hardware—remain a theme, as recent coverage contrasted Eli Lilly’s relative outperformance versus certain mega-cap tech over the past few weeks.
Bonds
Bond ETFs were nearly flat, consistent with minimal net change in the provided Treasury benchmarks. TLT edged to 87.83 (-0.06%), IEF to 96.53 (-0.02%), and SHY to 82.98 (+0.02%). The 10-year at 4.18% versus a 2-year at 3.51% leaves the intermediate belly still sensitive to any upside surprise in the delayed CPI. For now, fixed income did not provide a decisive signal, which left equity factor leadership and sector-specific narratives to drive index moves.
Commodities
- Precious metals: Strength was notable. GLD rose to 399.28 (+0.86% vs. 395.89 prior), while SLV surged to 60.27 (+4.4% vs. 57.73). This aligns with commentary that precious metals could continue to benefit in a late-cycle, policy-transition environment. Anchored inflation expectations alongside policy easing hopes can be constructive for gold, and silver’s higher beta was evident today.
- Energy: The oil proxy USO climbed to 67.97 (+2.7% vs. 66.17), and natural gas (UNG) advanced to 12.64 (+4.4% vs. 12.10). Broad commodities, via DBC, gained to 22.84 (+1.15%). The rebound comes against a year-to-date narrative of ample supply and soft prices. Follow-through will be important to test whether a durable floor is forming into year-end.
FX and crypto
The euro was quoted around 1.174 versus the dollar (EURUSD), putting the pair in the mid-1.17s. Without a directly comparable prior-day mark in the data, we simply note levels rather than a directional call. In digital assets, crypto traded heavy: Bitcoin’s mark price was 85,967, below its open for the session, and Bloomberg reported the token slipped under $86,000 while probing year-to-date lows. Ether tracked weaker at 2,826, down from its session open near 2,932 as crypto broadly underperformed risk assets that were already soft.
Notable news and movers
- AI/data-center complex under pressure: Reports pointed to an unwind in the crowded AI trade, with concerns about debt-funded buildouts at hyperscalers and partners. Nvidia and Broadcom were singled out for sharp declines, while Oracle faced fresh skepticism tied to data-center financing rumors—though some argue the fear is overdone. ServiceNow’s slide was pinned on worries it could lean more heavily on M&A to support growth.
- Policy and the Fed: A leading Fed chair candidate indicated inflation could fall over the next three to four months and suggested a path for moderate rate cuts. Separate coverage emphasized the importance of Fed independence. Together, these items leave a near-term easing narrative intact, even as other officials have flagged risks to inflation into 2026, highlighting a nontrivial policy spread for the later horizon.
- Commodities leadership: Precious metals gained on the day, consistent with recent research commentary anticipating a favorable window for gold and silver. Oil’s bounce contrasted with articles underscoring that 2025 has been a historic year for oversupply and weak prices; for equity investors in Energy, today’s divergence poses a question: was this a trading bounce or the start of stabilization?
- Primary markets: Medical supplier Medline’s IPO priced at $29 per share, raising $6.26 billion—the largest U.S. listing of 2025—adding a constructive data point for equity capital markets as investors look toward 2026 issuance.
Outlook—what to watch next
- Thursday’s delayed CPI release is the next major macro input. With five- and ten-year inflation expectations anchored near 2.35% and 2.27%, a hotter-than-expected print could challenge the moderate-cuts narrative; a cooler number would reinforce it. Rates sensitivity should be highest in the belly of the curve and in rate-proxy equities.
- AI-spending cadence and financing tone: Headlines today focused on data-center capex sustainability. Watch how enterprise software names and hyperscaler suppliers guide on 2026 spending, and whether financing conditions tighten.
- Leadership rotation: If Tech (XLK) remains soft, monitor whether Healthcare (XLV), Financials (XLF), and commodity-linked equities can absorb leadership. Today’s divergence—metals up, Energy equities down—bears watching for confirmation or mean reversion.
- Crypto near support: Bitcoin hovering around $86,000 will keep the space in focus. A decisive break lower could spill over into broader risk sentiment at the margin.
- Primary issuance: Medline’s debut provides a gauge for investor appetite into year-end; follow the after-market trading to infer conditions for early-2026 listings.
Risks
- Policy path ambiguity: Mixed Fed messaging on the 2026 outlook creates tail risk for duration and duration-sensitive equities.
- AI-capex normalization: If data-center financing conditions or ROI hurdles bite, earnings revisions in AI hardware/software ecosystems could accelerate.
- Macro growth slippage: Recent business surveys pointed to tariff- and inflation-related demand softness; a weak CPI/PPI mix could morph into margin pressure if pricing power fades faster than input costs.
- Positioning/flows: With risk appetite elevated earlier in the quarter, any negative macro surprise could meet thin year-end liquidity.
- Commodity volatility: Oil and gas rebalancing, and precious metals momentum, could increase cross-asset correlation and intraday swings if macro data surprise.
Bottom line
Today’s close featured a tech-led pullback within an otherwise steady macro-rate environment. With SPY down about 1.1% and QQQ off 1.9%, the story was sector leadership and a reassessment of the AI spend trajectory, not a rates shock. Fixed income was effectively flat, while commodities—especially precious metals—provided ballast. The next decisive input is Thursday’s CPI. Until then, focus remains on the durability of AI-related capital spending, the breadth of leadership outside mega-cap tech, and whether commodities can sustain their bid into year-end.