U.S. stocks finished lower on Monday, December 8, 2025, as Wall Street stepped back from record territory and investors shifted into wait-and-see mode ahead of this week’s Federal Reserve meeting.
At the closing bell:
- S&P 500 fell about 0.4% to roughly 6,841, down around 29 points from Friday’s close of 6,870.40. [1]
- Dow Jones Industrial Average dropped about 0.6% to around 47,674, a decline of roughly 281 points. [2]
- Nasdaq Composite eased about 0.2% to roughly 23,530, pulling back modestly after last week’s advance. [3]
Even with today’s pullback, the S&P 500 remains up roughly 17% in 2025, and the Nasdaq is more than 22% higher year‑to‑date, underscoring how strong the rally has been going into “Fed week.” [4]
Market Today: Fed Week Knocks Rally Into Reverse
After flirting with record highs last week, major U.S. stock indexes opened Monday near the top of their recent ranges but quickly lost steam. By afternoon, AP and local outlets were describing Wall Street as “pulling away from its record heights,” with all three big benchmarks in the red. [5]
The mood was cautious rather than panicked:
- All but one S&P 500 sector traded lower at one point, as noted by Reuters, highlighting broad-based softness rather than a single-sector blowup. [6]
- Volatility ticked higher: the S&P 500 VIX index climbed roughly 8–9%, reflecting increased demand for downside protection heading into the Fed’s decision. [7]
This pullback follows a powerful run that saw the S&P 500 finish Friday just a fraction of a percent below its all‑time closing high from October. [8]
Why Stocks Fell: All Eyes on the Federal Reserve
Rate-cut hopes — and worries
The Federal Reserve’s December meeting is the dominant story on Wall Street this week. Futures markets are pricing in a high probability of a third consecutive rate cut, and Monday’s trading suggested investors are reluctant to push stocks to fresh records until they see exactly how dovish (or not) the Fed sounds. [9]
Key points driving Monday’s caution:
- Yields edged higher: Reuters reported that U.S. Treasury yields rose as traders reassessed how aggressively the Fed might ease in 2026, tempering enthusiasm for risk assets. [10]
- No major data surprise: After last week’s cooler PCE inflation report and better consumer‑sentiment readings boosted bets on cuts, Monday brought few new catalysts, encouraging investors to lock in some gains. [11]
- Fed messaging risk: A Reuters macro piece highlighted that markets don’t fully buy the idea that President Trump’s Fed pick will slash rates aggressively, adding another layer of uncertainty about the longer‑term policy path. [12]
In short, the trend is still bullish, but traders appear unwilling to chase stocks significantly higher until they hear Fed Chair Jerome Powell’s tone on inflation, growth and the 2026 rate trajectory.
Big Movers: Mega-Deals and AI Infrastructure in Focus
While indexes drifted lower, individual stories kept markets lively.
Netflix–Warner Bros. Discovery mega-deal drama
The proposed $72 billion acquisition of Warner Bros. Discovery by Netflix remained one of the most closely watched narratives on Monday: [13]
- Warner Bros. Discovery (WBD) has been surging since the deal talk surfaced, as investors bet on a premium takeover price. [14]
- Netflix (NFLX) initially sold off on fears of overpaying and regulatory risk, but a Barron’s report noted that Netflix shares were up again Monday, suggesting traders increasingly expect the deal to be modified, blocked, or otherwise structured in a shareholder‑friendly way. [15]
- Over the weekend, President Trump said the combined company’s market power “could be a problem” and signaled he expects to be personally involved in regulatory decisions, reinforcing concerns that antitrust scrutiny could be intense. [16]
The deal debate touches several themes that matter for the broader market: streaming saturation, debt‑heavy media balance sheets, and how aggressive the new administration will be on antitrust.
IBM’s $11 billion leap deeper into data infrastructure
Another major corporate story is IBM’s agreement to acquire Confluent, a data‑infrastructure specialist, in an all-cash deal valued at about $11 billion. [17]
- Confluent (CFLT) shares jumped more than 25% on the news, underscoring Wall Street’s appetite for picks‑and‑shovels plays in AI and real‑time data streaming. [18]
- IBM (IBM) traded higher as well, with investors welcoming a bolt‑on acquisition that fits its hybrid‑cloud and AI strategy rather than a transformational mega‑merger. [19]
The message from both deals: even late in the cycle, M&A in tech and media remains very much alive, especially around AI and content.
Index Additions: Carvana, CRH and Comfort Systems Join the S&P 500
Index changes are another quiet but important driver beneath the surface.
S&P Dow Jones Indices confirmed that Carvana (CVNA), CRH and Comfort Systems USA (FIX) will join the S&P 500 on December 22, displacing LKQ, Solstice Advanced Materials and Mohawk Industries, which will move to smaller‑cap benchmarks. [20]
Why it matters:
- Inclusion in the S&P 500 typically brings forced buying from index funds and closet indexers, supporting share prices of new entrants.
- It also highlights how market cap has shifted toward auto e‑commerce, building materials, and infrastructure‑linked services, reflecting evolving themes in U.S. growth and re‑shoring.
Monday’s trading around these names was choppy but generally constructive, with many investors positioning ahead of the official rebalancing later this month.
Strategists Split but Still Bullish on 2026 S&P 500 Targets
Even as the market cools short‑term, Wall Street strategists are ratcheting up longer‑term targets.
Oppenheimer: S&P 500 to 8,100 by end‑2026
Oppenheimer Asset Management set one of the most bullish Street targets, projecting the S&P 500 will reach 8,100 by the end of 2026 — roughly 18% above its recent 6,870.40 close. [21]
Their thesis:
- Earnings per share rising to around $305.
- A resilient U.S. economy, even with higher-for-longer rates than in the 2010s.
- Continued leadership from AI‑heavy mega‑cap tech such as Nvidia, Microsoft and Alphabet. [22]
BNP Paribas: More cautious, but still positive
BNP Paribas is also constructive, forecasting the S&P 500 at 7,500 by late 2026 — about 10% above where strategists pegged it at the time of the note. Their outlook leans on solid U.S. growth and strong corporate profits, but they see European stocks potentially outperforming from current levels. [23]
Put together, the latest forecasts sketch a consensus of mid‑to‑high single‑digit annual returns from here, with upside tied to how smoothly the Fed can cool inflation without derailing growth — and how durable today’s AI‑driven profit boom proves to be.
The Macro Backdrop: From Inflation Scares to Soft‑Landing Hopes
Monday’s decline didn’t happen in a vacuum. It followed a multi‑week rally fueled by:
- Softer PCE inflation data that kept hopes alive for further rate cuts. [24]
- Improving consumer sentiment, which bolstered the case that the U.S. economy can slow without falling into recession. [25]
- A sense that the worst of the rate‑hike shock is behind markets, even if borrowing costs remain well above pre‑pandemic levels. [26]
At the same time, pockets of stress remain:
- High‑valuation tech and AI leaders have seen periodic sell‑offs when investors question the sustainability of trillion‑dollar spending plans. [27]
- Crypto‑related assets, particularly Bitcoin, remain volatile; Monday’s pre‑market note from Investopedia highlighted Bitcoin around $91,900, up from recent lows but still prone to sharp swings that can bleed into tech sentiment. [28]
Net‑net, Monday looked less like a trend change and more like a classic consolidation day in front of a major policy event.
What Investors Are Watching Next
With the closing bell behind us, here’s what will likely dominate the conversation in the coming sessions:
- Fed decision and dot plot (Wednesday)
- Markets expect a 25‑basis‑point cut; the bigger risk may be the Fed’s guidance for 2026 and how many additional cuts officials pencil in. [29]
- Powell’s press conference tone
- A dovish emphasis on slowing inflation and resilient growth could reignite the rally.
- A tougher line on wage pressures or asset valuations could extend Monday’s pullback.
- Follow‑through on mega‑deals
- Sector rotations
- Whether investors continue to rotate out of mega‑cap tech into cyclicals, financials and industrials, a pattern some strategists see as healthy for the longevity of the bull market. [32]
Takeaway for After-the-Bell Readers
For traders and long‑term investors alike, Monday’s session was a reset, not a reversal:
- The Dow, S&P 500 and Nasdaq all moved modestly lower, but remain near records after a strong year. [33]
- Fed uncertainty, not a new shock, was the main driver — a reminder that monetary policy still sets the rhythm of this market. [34]
- M&A in tech and media, plus aggressive index‑target upgrades, show that risk appetite is still very much aliveunder the surface. [35]
If the Fed delivers the cut markets expect — and avoids sounding too anxious about inflation or asset bubbles — today’s dip could prove to be another buy‑the‑pause moment in a bull run increasingly defined by AI, mega‑deals and the world’s most closely watched central bank.
References
1. www.investing.com, 2. www.investing.com, 3. www.investing.com, 4. apnews.com, 5. www.smdailyjournal.com, 6. www.reuters.com, 7. www.investing.com, 8. apnews.com, 9. www.investopedia.com, 10. www.investing.com, 11. www.reuters.com, 12. www.reuters.com, 13. apnews.com, 14. apnews.com, 15. www.barrons.com, 16. www.investopedia.com, 17. www.investopedia.com, 18. www.investopedia.com, 19. www.investopedia.com, 20. www.investopedia.com, 21. www.reuters.com, 22. www.reuters.com, 23. www.reuters.com, 24. www.reuters.com, 25. m.economictimes.com, 26. www.schwab.com, 27. www.reuters.com, 28. www.investopedia.com, 29. www.schwab.com, 30. www.barrons.com, 31. www.investopedia.com, 32. madisoninvestments.com, 33. www.investing.com, 34. www.reuters.com, 35. www.investopedia.com
