New York — Friday, December 5, 2025.
The US stock market today is trading in a cautious but upbeat mood as investors digest a week of mixed economic data and brace for the Federal Reserve’s preferred inflation gauge, the PCE price index, due later in the day. Stock indexes remain within touching distance of all‑time highs, while bond yields and the US dollar continue to reflect growing confidence that the Fed will deliver a rate cut at next week’s policy meeting. [1]
Global equities are also firm, with world stocks on track for a second straight week of gains, helped by a softer dollar and record‑setting moves in industrial metals such as copper. [2]
Major US Indexes Today: Still Near Record Territory
After a mixed but resilient close on Thursday, Wall Street enters Friday’s session with all three major US stock indexes hovering just shy of record levels:
- S&P 500 today – The benchmark index closed Thursday up about 0.1% and is now less than 1% below its all‑time closing high. Futures and early Friday trade point to modest additional gains, putting the S&P 500 around the 6,870 level, roughly 0.2–0.3% higher than the previous close. [3]
- Nasdaq Composite today – The tech‑heavy Nasdaq added roughly 0.2% on Thursday and sits about 2% below its record closing level, with futures suggesting another small advance of roughly 0.3–0.4% as Friday’s session unfolds. [4]
- Dow Jones today – The Dow Jones Industrial Average finished essentially flat on Thursday, within about 1% of its own record high, and futures point to a slight dip or near‑unchanged open as investors wait for the inflation data before making big moves. [5]
Over the past nine sessions, the S&P 500 and Nasdaq have closed higher on eight of them, a powerful run that underlines how quickly sentiment has swung back toward a “soft landing” narrative after a jittery November. [6]
Bottom line: The US stock market today is near record levels, but traders are reluctant to push indexes decisively higher until they see whether inflation is still cooling.
Why Today’s PCE Inflation Report Is So Important
The main event on the calendar is the Personal Consumption Expenditures (PCE) price index, the Fed’s favored inflation gauge. Because of government data disruptions, the report covers September but is being released with a delay — and markets are treating it as a crucial final input before the Fed meets on December 9–10. [7]
Economists expect: [8]
- Core PCE (ex‑food and energy):
- About 0.2% month‑on‑month
- Around 2.9% year‑on‑year
If the data comes in soft or in line with expectations:
- It reinforces the narrative that inflation is gliding toward the Fed’s 2% target.
- Markets will see it as a green light for a December rate cut and potentially more easing in 2026.
- Risk assets – especially growth and tech stocks – could get another leg higher as discount‑rate pressures ease. [9]
If the data runs hot – even modestly:
- Bond yields could jump, pressuring valuation‑heavy sectors like big‑cap technology.
- Traders might quickly reprice how “dovish” next week’s Fed move can be.
- Strategists warn this kind of surprise could trigger one of the sharpest single‑day pullbacks since early autumn, particularly given how far stocks have already run. [10]
As one recent analysis put it, today’s PCE reading is more than just another monthly release – it could set the tone for markets into year‑end, determining whether investors lean into a “Santa rally” or brace for a volatility spike. [11]
Fed Rate‑Cut Odds: 80–90% Chance of a Move Next Week
The Federal Reserve’s December 9–10 meeting is now firmly in the market’s sights. Derivatives markets, Fed‑watch tools and independent analyses all suggest strong odds of a 25‑basis‑point rate cut: [12]
- A detailed Fed preview from Plus500 puts the probability of a December cut at about 80%, based on futures pricing and recent dovish comments from key Fed officials. [13]
- Reuters notes that markets are roughly 90% priced for a cut, framing it as one of the most contentious Fed decisions in years because up to five voting members have expressed public doubts about easing too quickly. [14]
- CME’s FedWatch tool, cited in pre‑market commentary, shows odds around 87% for a December rate cut, underscoring near‑consensus among traders. [15]
At the same time, Fed officials are far from united:
- Dovish policymakers such as John Williams and Christopher Waller have signaled openness to easing policy to support a softening labor market. [16]
- More hawkish voices, including Boston Fed President Susan Collins, argue that inflation remains “somewhat elevated” and that policy is already sufficiently restrictive. [17]
Because the Fed’s blackout period began on November 29, there will be no fresh official commentary before the decision, leaving today’s data and market expectations to do most of the talking. [18]
Labor Market Signals: “Bad News” as Good News for Markets
This week’s economic backdrop is dominated by a paradox: some weakening labor data has actually been welcomed by Wall Street.
Recent reports show: [19]
- Weekly jobless claims came in lower than economists expected, suggesting the labor market isn’t collapsing.
- But corporate layoff announcements have reached around 1.2 million for 2025, the highest level since the 2020 pandemic shock.
- A softer‑than‑expected ADP private payrolls reading added to the picture of a cooling, but not crashing, jobs market.
For the Fed, this combination helps justify the idea of “modestly restrictive” policy with room to cut. For investors, the takeaway is that the economy appears to be slowing enough to ease inflation, but not enough to scream “recession” — the so‑called Goldilocks scenario that typically supports risk assets. [20]
Global Markets Today: Asia and Europe Set a Positive Tone
Overnight, global markets have largely paved the way for a constructive start to US trading:
- European stocks are higher, with the STOXX 600 up about 0.3% by mid‑morning and on track for a second consecutive week of gains. [21]
- In Asia, most markets ended the week stronger, even as Japan’s Nikkei 225 slipped on renewed expectations of a Bank of Japan rate hike and a sharp move in Japanese government bond yields. [22]
Global investors are essentially “strapping in” for a Fed rate cut, as one Reuters headline put it, with the weaker dollar and firmer commodity prices reflecting the shift toward a more accommodative US policy stance. [23]
Technical Picture: Dow Theory Flashes a Bullish Signal
Beyond macro data, technical analysts are focused on a classic indicator: Dow Theory.
A fresh Bloomberg analysis highlights that the Dow Jones Transportation Average has now logged nine consecutive daily gains, a streak seen only a handful of times this century. The index has also broken through a key resistance zone that capped rallies over the past year. [24]
Why that matters:
- Under Dow Theory, a strong advance in transport stocks – companies that move goods by road, rail, and water – is often taken as confirmation that underlying economic activity and corporate earnings are strengthening.
- When industrials and transports rally together, it’s historically been associated with sustained bull markets rather than brief bear‑market rallies. [25]
Combined with the S&P 500 sitting within half a percent of a record closing high, this technical backdrop supports the idea that the current US equity rally still has room to run — as long as the macro data cooperates. [26]
Sectors and Stocks in Focus Today
While the headline indexes drift near records, there’s plenty happening under the surface of the US stock market today.
Sector Rotation: Cyclicals vs. Defensives
Recent trading has seen: [27]
- Industrials and information technology stocks leading gains.
- More defensive areas, including consumer staples and healthcare, lagging the broader market.
- Small caps, as proxied by the Russell 2000, outperforming large caps as investors price in easier financial conditions.
This pattern fits neatly with the “rate‑cut and soft‑landing” narrative: cyclicals and growth names typically respond best when investors believe borrowing costs will fall and earnings can grow without a deep recession. [28]
Notable Movers: Netflix, Cooper, HPE, Cloudflare & More
Pre‑market and early‑session action has several individual names on traders’ dashboards: [29]
- Netflix (NFLX) – Slightly lower despite winning key rights in an auction with Warner Bros. Discovery, reminding investors that even strategic wins can’t fully offset valuation concerns when expectations are high.
- The Cooper Companies (COO) – Surging after strong quarterly results and upbeat guidance for FY26, making it one of the day’s standout gainers.
- Hewlett Packard Enterprise (HPE) – Under pressure after issuing softer‑than‑expected sales guidance, despite topping profit estimates.
- Zumiez (ZUMZ) and SMX (Security Matters) – Posting double‑digit percentage gains after upbeat earnings and corporate updates, respectively.
- Cloudflare (NET) – Facing renewed selling pressure in pre‑market trading after a second major outage in as many weeks, raising questions about reliability in a business built on always‑on connectivity. [30]
With indexes so close to record highs, stock‑specific surprises — particularly in tech and growth names — can have an outsized impact on intraday sentiment.
Bonds, Dollar and Commodities: The Macro Cross‑Check
The US stock market today isn’t moving in isolation. Fixed income, currencies and commodities are all sending signals that line up with a “slow easing” story from the Fed. [31]
Key cross‑asset moves:
- US Treasury yields – The 10‑year yield trades near 4.10–4.11%, slightly above Wednesday’s close but off recent peaks, while the 2‑year yield sits near 3.53%. Markets are balancing near‑term easing with uncertainty about how far the Fed will ultimately go. [32]
- US dollar – The dollar index is lower on the week and down roughly 0.5%, with notable weakness against the Japanese yen as investors anticipate the Fed cutting even as the Bank of Japan edges toward its first rate hike in decades. [33]
- Copper – Benchmark copper futures have hit record highs near $11,700 per ton, boosted by supply concerns and expectations of lower US rates — a supportive backdrop for industrial and materials stocks. [34]
- Gold and silver – Gold is modestly higher on the day and silver has rallied strongly this week, reflecting both safe‑haven demand and the impact of lower real yields. [35]
Together, these moves reinforce the idea that financial conditions are starting to loosen, even before the Fed actually cuts, which in turn supports higher equity valuations — but also raises the stakes if inflation fails to cool as expected.
Strategy and Forecasts: Slow Easing, but Risks Ahead
Several new pieces of analysis published on December 5 sketch out how strategists see the next leg of the US stock market cycle: [36]
- Base Case: Slow, Gradual Easing
- AInvest and other macro commentators see the December meeting as the start (or continuation) of a gentle rate‑cut cycle, with an initial 25‑basis‑point move likely and the possibility of more cuts in early 2026.
- In this scenario, bond yields drift lower, the US dollar weakens, and cyclical and consumer‑sensitive sectors outperform as financing conditions improve.
- Historical Pattern: Post‑Cut Equity Performance
- Plus500 cites research showing that, across 11 rate‑cutting cycles since 1980, the S&P 500 has delivered average 12‑month returns of around 14% after the first cut — though outcomes vary dramatically depending on whether the economy slips into recession or achieves a soft landing. [37]
- The key takeaway: cuts tend to support equities if they are part of a controlled policy normalization rather than a panicked response to a deep downturn.
- The “New Fed Chair” Risk
- In an interview cited by Moneycontrol/TradingView, strategist Ed Clissold warns that markets have historically suffered an average 15% correction in the first six months of a new Fed chair’s term, as investors “test” the central bank’s resolve. [38]
- Even if the current bull market continues, Clissold sees the potential for significant volatility around any future leadership transition at the Fed, particularly if rate cuts continue while inflation remains elevated.
- Data‑Dependent Wildcard: Today’s PCE Report
- Economic Times analysis underscores that a cool PCE print could unleash a powerful year‑end rally, while a hot reading might spark one of the nastiest single‑day sell‑offs since early fall by reviving fears of a “higher for longer” stance. [39]
In short, most forecasts now assume continued US equity strength, but with a clear caveat: the rally is increasingly dependent on inflation behaving and the Fed managing a tricky transition to easier policy without sacrificing its inflation‑fighting credibility.
What to Watch for the Rest of Today
For readers tracking the US stock market today, here are the key items likely to drive the tape into the close:
- The PCE Release and Immediate Market Reaction
- Watch how S&P 500, Nasdaq, and Dow futures behave in the minutes before and after the data hits. Big moves in Treasury yields and the dollar will be tell‑tale signs of whether markets see the print as dovish or hawkish. [40]
- Breadth and Leadership
- Does the rally broaden beyond mega‑cap tech into financials, industrials, and small caps? That would support the Dow Theory and soft‑landing narrative. Narrow gains concentrated in a few AI or cloud names would hint at a less stable advance. [41]
- Rate‑Cut Odds After the Data
- Track updates to December FedWatch probabilities. A sharp drop from the current 80–90% range would likely weigh on high‑growth stocks and flatten intraday gains. [42]
- Company‑Specific Headlines
- Any follow‑up news around Cloudflare’s outages, Netflix’s content deals, or fresh earnings guidance from large caps could swing sentiment in their respective sectors. [43]
The Bottom Line
The US stock market today (December 5, 2025) finds itself at a crossroads:
- Indexes are near all‑time highs, backed by improving technicals and growing confidence in a December Fed rate cut.
- The macro backdrop is supportive but fragile, with cooling (but not collapsing) labor conditions and inflation that seems to be drifting lower — yet remains above target.
- A single data release — today’s PCE report — could determine whether Wall Street finishes the year with a fresh leg higher or a volatile shakeout that tests investors’ conviction.
For now, the path of least resistance still points up, but in a market this extended, the margin for error is shrinking.
This article is for informational purposes only and does not constitute investment advice. Market levels and probabilities cited are approximate and subject to change throughout the trading day.
References
1. www.reuters.com, 2. www.reuters.com, 3. www.investopedia.com, 4. www.investopedia.com, 5. www.investopedia.com, 6. www.investopedia.com, 7. www.reuters.com, 8. www.reuters.com, 9. www.reuters.com, 10. m.economictimes.com, 11. m.economictimes.com, 12. us.plus500.com, 13. us.plus500.com, 14. www.reuters.com, 15. www.benzinga.com, 16. us.plus500.com, 17. us.plus500.com, 18. us.plus500.com, 19. www.investopedia.com, 20. www.investopedia.com, 21. www.reuters.com, 22. www.reuters.com, 23. www.reuters.com, 24. www.bloomberg.com, 25. www.bloomberg.com, 26. www.bloomberg.com, 27. www.benzinga.com, 28. www.ainvest.com, 29. www.benzinga.com, 30. www.investing.com, 31. www.reuters.com, 32. www.reuters.com, 33. www.reuters.com, 34. www.reuters.com, 35. www.reuters.com, 36. www.ainvest.com, 37. us.plus500.com, 38. www.tradingview.com, 39. m.economictimes.com, 40. www.reuters.com, 41. www.bloomberg.com, 42. us.plus500.com, 43. www.investing.com
