NEW YORK — Dec. 16, 2025 (10:30 a.m. ET) — The S&P 500 is struggling to find a clear direction in Tuesday’s session as investors digest a fresh burst of delayed U.S. economic data, a renewed slide in oil prices, and shifting expectations for how quickly the Federal Reserve may cut rates again in 2026. Early trading has been choppy, with energy and healthcare weighing on the benchmark while pockets of mega-cap and tech attempt to stabilize after recent “AI bubble” jitters. [1]
With the closing bell still hours away, the story for the S&P 500 today is less about a single headline and more about a three-way tug-of-war: (1) a cooling-but-not-cracking labor market, (2) uneven consumer spending signals, and (3) the market’s conviction that the Fed will ultimately have to deliver more easing than it projected last week. [2]
Below is what matters most for the index into the close and after the bell—and what traders are likely to keep reacting to in after-hours trading.
Where the S&P 500 stands this morning
The S&P 500 hovered near flat early in the session. Reuters reported the index at 6,814.54 around 9:56 a.m. ET, down 0.03%, alongside a nearly unchanged Dow and a slightly higher Nasdaq. [3]
By about 10:20 a.m. ET, Investopedia described a modest pullback across major benchmarks, with the S&P 500 down roughly 0.3% in “recent trading,” underscoring how quickly positioning has been shifting as investors parse the data. [4]
In other words: the market isn’t panicking—but it also isn’t eager to buy risk aggressively with more high-impact releases still ahead this week.
The big catalyst: a delayed jobs report that keeps rate-cut hopes alive
The market’s first major test Tuesday was the delayed U.S. employment report, which delivered a mix that can be read as “softening, but not breaking”:
- Nonfarm payrolls rose by 64,000 in November, beating expectations in a Reuters poll, after payrolls fell by 105,000 in October amid government workforce changes tied to spending cuts and deferred buyouts. [5]
- The unemployment rate climbed to 4.6% (versus 4.4% in September), a jump that markets tend to treat as a stronger signal for eventual Fed easing than the headline payroll number. [6]
- The data releases themselves were delayed by the 43-day federal government shutdown, which has created unusual gaps and measurement issues that policymakers and investors are still working around. [7]
Why that matters for the S&P 500: a rising unemployment rate can be a double-edged sword. It can point to weaker growth ahead (bad for earnings), but it can also reinforce the case for rate cuts (often supportive for stocks, especially growth and longer-duration assets).
Tuesday’s market reaction leaned toward the “rates will fall” interpretation—at least initially.
Fed expectations shift again: futures briefly lift odds of a January cut
In rates markets, traders immediately recalibrated.
According to Reuters, fed funds futures briefly priced about a 31% chance of a January rate cut right after the jobs report (up from ~22% just before), before settling back to about 27%, with pause odds around 73%. [8]
Beyond January, the bigger message is that the market continues to expect the Fed to do more than it recently signaled:
- Reuters reported investors are now pricing roughly 57–58 basis points of cuts in 2026, implying at least two quarter-point cuts. [9]
- That market pricing contrasts with the Fed’s more cautious tone from last week’s decision (and the updated policy debate around the pace of easing). [10]
For equity traders, this “rates path” tension is crucial: if the economy slows faster, cuts arrive sooner but earnings risk rises; if the economy stays resilient, earnings hold up but the Fed can afford to wait.
Consumer spending: retail sales flat, but “core” demand looks firmer
A second delayed report added nuance: U.S. retail sales were unchanged in October, missing expectations for a small gain. [11]
However, Reuters highlighted that core retail sales (a measure that better tracks consumer spending in GDP calculations) rose 0.8% in October—suggesting consumers may be slowing in discretionary pockets while still keeping overall demand afloat. [12]
The Associated Press also pointed to a more uneven consumer backdrop, with high prices and economic uncertainty pressuring many households even as holiday promotions help keep spending moving. [13]
For the S&P 500, “flat retail sales” is not automatically bearish—but it does reinforce the idea that growth is cooling, and that stock leadership may rotate toward areas that can defend margins in a slower demand environment.
Sector watch: why energy and healthcare are dragging the index
Energy gets hit by another leg down in oil
Energy has been one of the weakest S&P 500 sectors Tuesday as crude prices slide to fresh multi-month lows.
- Investopedia cited WTI crude falling to about $55.30 a barrel, its lowest level since May, while noting energy was the S&P 500’s worst-performing sector Tuesday morning. [14]
- Reuters similarly reported the S&P 500 energy sector leading declines, tracking a drop in oil prices. [15]
- Barron’s framed the move as part of a broader oversupply narrative, citing expectations for a sizable oil surplus in 2026 and record-high U.S. production levels earlier this year. [16]
Lower oil can be positive for consumers and many non-energy businesses over time, but in the short run it pressures energy earnings and capex expectations, which can weigh on the index when the sector is moving sharply.
Healthcare pressured by guidance headlines
Healthcare has also been a notable weak spot. Reuters reported Pfizer shares sliding after a 2026 profit forecast came in below analyst expectations, contributing to sector declines; Eli Lilly also traded lower in early action. [17]
When healthcare and energy both lean lower on the same day, the S&P 500 often needs tech-heavy leadership to offset the drag—something investors have been less willing to do aggressively amid elevated valuation concerns.
Growth scare signals: business activity slows to a six-month low
Another data point adding to the “cooling” narrative: the latest S&P Global “flash” PMI readings.
Reuters reported that U.S. business activity growth slowed in December, with the composite PMI easing to 53.0 (from 54.2 in November). Services slowed to 52.9, manufacturing to 51.8, and new orders weakened—while input prices climbed to the highest in roughly three years, complicating the inflation picture. [18]
This is the uncomfortable setup markets dislike: slower growth signals alongside sticky cost pressures. It’s a recipe for uncertainty about both earnings and the pace of rate cuts—exactly the kind of environment that can keep the S&P 500 range-bound into the close.
What to watch after the bell: Lennar earnings take center stage
While macro data is driving the daytime tape, the clearest after-the-bell catalyst is corporate.
Lennar reports after today’s market close
Homebuilder Lennar (LEN) is scheduled to release results after the market closes today (Dec. 16), with a conference call set for Wednesday morning. [19]
Why it matters for the S&P 500:
- Housing is one of the most rate-sensitive parts of the economy—so any read-through on demand, cancellations, and incentives can influence broader market expectations about how restrictive policy really is.
- Investors are watching whether builders can protect margins as affordability stays tight.
Barron’s preview said Wall Street will be focused on buyer incentives (like mortgage rate buydowns) and margin resilience, with estimates pointing to Q4 EPS around $2.21 on roughly $9 billion in revenue. [20]
An Investing.com earnings preview similarly listed Lennar “after the close,” with consensus expectations near $2.21 EPSand roughly $9.01B in revenue. [21]
After-hours market implication: If Lennar’s guidance suggests incentives are easing and orders are stabilizing, it could support not just homebuilders but also a wider “soft landing” narrative. If incentives are rising and margins are compressing faster than expected, it can reignite concerns that rates are still too restrictive—and that growth will weaken further into 2026.
The next macro catalyst isn’t today: Thursday’s CPI release (with caveats)
Even though today’s “after the bell” focus is earnings-driven, the market is also trading in the shadow of the next major macro headline: CPI.
The Bureau of Labor Statistics schedule shows November 2025 CPI is due Thursday, Dec. 18, 2025 at 8:30 a.m. ET. [22]
But there’s a major caveat tied to the shutdown backlog: BLS has said the November CPI release will not include certain 1‑month percent changes where October data are missing, because October CPI collection was disrupted and cannot be fully reconstructed. [23]
Translation for S&P 500 traders: even the week’s most important inflation print may arrive with “blind spots,” which increases the chance of messier market reactions—especially if investors disagree on what the incomplete data means for the Fed’s next steps.
Forecasts and strategist views published today: 2026 targets diverge—AI remains the core debate
Even as the S&P 500 wrestles with today’s data, Wall Street is already fighting over the next question: how much upside is left in 2026, and how dependent is it on AI-driven leadership?
Reuters: base case still bullish—~7,490 by end-2026
A Reuters outlook piece published today said strategists broadly expect AI to remain central to portfolios, and cited a Reuters poll forecasting the S&P 500 rising nearly 12% to about 7,490 by end-2026—with inflation surprises, valuations, and tariff tensions flagged as key risks. [24]
Investopedia: BofA sees a more modest path; Oppenheimer much higher
Investopedia reported that Bank of America strategist Savita Subramanian expects more “lackluster” gains, projecting the S&P 500 around 7,100 by end-2026, while noting Oppenheimer has floated a much more optimistic 8,100 target. [25]
Barron’s: positioning risk grows as cash hits record lows
Barron’s cited Bank of America’s Global Fund Manager Survey showing investors holding record-low cash levels (3.3%), a sign of aggressive risk-taking that, historically, can leave markets more vulnerable if sentiment turns. [26]
Why these forecasts matter today: when positioning is crowded and leadership is narrow, “ordinary” macro surprises—like a higher unemployment rate or a weaker PMI—can trigger outsized moves as investors rush to de-risk.
The setup into the close: what could move the S&P 500 in the next few hours
Here are the practical drivers most likely to matter for the S&P 500 from now through the closing bell and into after-hours:
- Oil’s next move: If crude stabilizes, energy may stop bleeding; if it breaks lower again, it can keep pressure on the index’s downside “tone.” [27]
- Rates and the dollar: Any renewed drop in yields tends to support growth stocks, but it can also be interpreted as a growth warning if it’s too fast. [28]
- Healthcare guidance ripple effects: Big-cap healthcare is influential; further guidance disappointments can keep the sector heavy. [29]
- AI sentiment: The market is still trying to decide whether the recent wobble in “AI winners” is a pause—or the start of a broader valuation reset. [30]
- Lennar after-hours: A single earnings report won’t decide the economy, but in this environment, housing commentary can punch above its weight. [31]
Bottom line for the S&P 500 today after the bell
As of late morning on Dec. 16, 2025, the S&P 500’s path is being shaped by a market that sees cooling growth, a labor market that’s losing momentum at the edges, and rate-cut expectations that remain more aggressive than the Fed’s latest guidance—all while oil’s slump and sector-specific guidance headlines keep the index from building a durable bounce. [32]
After the bell, Lennar’s earnings are the main scheduled catalyst, but the bigger narrative remains the same: investors are positioning for a week where imperfect “catch-up” data—especially Thursday’s CPI—could still reprice both rates and equities quickly. [33]
References
1. www.reuters.com, 2. www.reuters.com, 3. www.reuters.com, 4. www.investopedia.com, 5. www.reuters.com, 6. www.reuters.com, 7. www.reuters.com, 8. www.reuters.com, 9. www.reuters.com, 10. www.reuters.com, 11. www.reuters.com, 12. www.reuters.com, 13. apnews.com, 14. www.investopedia.com, 15. www.reuters.com, 16. www.barrons.com, 17. www.reuters.com, 18. www.reuters.com, 19. investors.lennar.com, 20. www.barrons.com, 21. www.investing.com, 22. www.bls.gov, 23. www.bls.gov, 24. www.reuters.com, 25. www.investopedia.com, 26. www.barrons.com, 27. www.investopedia.com, 28. www.investopedia.com, 29. www.reuters.com, 30. www.investopedia.com, 31. investors.lennar.com, 32. www.reuters.com, 33. investors.lennar.com
