The S&P 500 finished modestly lower on Monday, December 15, 2025, as Wall Street entered the final full trading week of the year with a familiar tension: investors are increasingly reluctant to keep “all the eggs in the AI basket,” but they’re still waiting for the next clear catalyst to define leadership into year-end. [1]
S&P 500 closing recap: a small dip that signals a bigger debate
After a choppy session, the S&P 500 ended down 0.15%, falling 9.95 points to 6,816.34 (preliminary), according to Reuters. The Nasdaq Composite underperformed, pressured by ongoing volatility in AI-linked megacaps and high-growth software, while the Dow was nearly flat. [2]
- S&P 500: 6,816.34, -0.15%
- Nasdaq Composite: 23,060.03, -0.58%
- Dow Jones Industrial Average: 48,416.62, -0.09% [3]
The day’s price action may look mild on the surface, but it reflects a market trying to reconcile two competing narratives at once:
- The economy is cooling just enough to keep rate-cut hopes alive.
- The AI investment cycle is huge—and increasingly controversial—at today’s valuations.
What moved the market today: “Where to find the leadership”
Reuters highlighted the market’s broader mood with a blunt assessment from BMO Family Office CIO Carol Schleif: investors are struggling to find leadership because they don’t want the rally to depend entirely on AI, and they’re “holding their breath” ahead of the week’s key labor data. [4]
That dynamic showed up in intraday reversals: early optimism faded as traders weighed three main forces:
1) A data-packed week (and a backlog) is about to hit markets
This week’s calendar is unusually consequential because the U.S. is still working through delayed releases after the federal government shutdown earlier in the quarter. Reuters noted investors are bracing for nonfarm payrolls figures for October and November, plus reports on retail sales, business activity, and inflation, all of which could reshape expectations for 2026 rate cuts. [5]
The Associated Press framed the setup similarly: markets are drifting as investors wait for economic reports that could influence interest-rate expectations, with particular focus on the jobs report and inflation data. [6]
2) The Fed chair “horse race” is now a market variable
Beyond macro data, speculation around the next Federal Reserve chair is adding another layer of uncertainty. Earlier on Monday, Reuters reported that President Trump had narrowed potential picks for next year’s Fed chair to Kevin Warsh or Kevin Hassett, with markets reading them as relatively dovish—supportive of future rate cuts—though inflation remains above 2%. [7]
By the close, Reuters also reported traders were assessing a separate report indicating Hassett’s candidacy faced pushback among people close to Trump, as speculation intensifies with Jerome Powell’s term ending in May. [8]
For equities, the practical takeaway is simple: the path of rates is still the dominant macro lever, and leadership uncertainty at the Fed can quickly translate into volatility in both yields and risk assets.
3) The AI trade is no longer a straight line
The AI theme didn’t disappear today—but the market’s confidence in how it gets monetized (and who benefits) is clearly being tested.
Reuters noted the S&P 500 and Nasdaq were coming off their steepest daily declines in more than three weeks on Friday amid concerns about inflation and debt-fueled AI investment. [9]
That “AI unease” intensified on Monday with a fresh, high-profile warning from Bridgewater Associates.
Bridgewater’s warning: AI spending is entering a “dangerous phase”
In one of the most talked-about market notes of the day, Bridgewater co-CIO Greg Jensen warned that the AI boom may be entering a “dangerous” stage as big tech increasingly relies on external funding to finance the buildout—because costs are rising beyond what internal cash flows can support. [10]
Bridgewater’s note went further than typical valuation hand-wringing, arguing there is a “reasonable probability” of a bubble forming. It also pointed to a UBS estimate showing AI data center and project financing deals surged to $125 billion through November 2025, up from $15 billion in the same period of 2024—an eye-catching acceleration that underscores how capital-intensive the AI infrastructure race has become. [11]
The implication for the S&P 500 is meaningful: when a single theme is both (a) heavily weighted in index returns and (b) increasingly questioned on capital discipline, even a small shift in sentiment can ripple across the benchmark.
The day’s key stock stories inside the S&P 500
Even on a relatively quiet index day, a handful of single-stock headlines helped shape the tape:
Tesla rebounds on robotaxi commentary
Reuters reported Tesla gained after CEO Elon Musk said the EV maker was testing robotaxis without safety monitors in the front passenger seat—another reminder that investor enthusiasm for “AI-adjacent” stories is still alive, even as the market debates valuations more broadly. [12]
ServiceNow slides on an M&A headline (and investor skepticism)
ServiceNow fell after reports it is in advanced talks to acquire cybersecurity startup Armis, a story that lit up both the software and cybersecurity corners of the market. Reuters flagged the move in its closing recap. [13]
MarketWatch’s reporting captured why the reaction was so sharp: investors appeared to interpret the potential deal as a sign ServiceNow may be leaning more heavily on acquisitions to sustain growth, at a time when AI leadership and organic momentum are under scrutiny across enterprise software. [14]
iRobot plunges after filing for bankruptcy
On the downside, Reuters cited iRobot tumbling after the Roomba maker filed for bankruptcy protection—one of the day’s stark reminders that beneath index-level calm, dispersion remains intense. [15]
Global backdrop: China slowdown headlines keep risk appetite in check
Overseas developments also fed into the day’s cautious tone, especially fresh signs of softness in China.
Reuters reported that China’s November data showed industrial output growth slowed and retail sales weakened, adding to concerns about deflation risks and the durability of growth in the world’s second-largest economy. [16]
For U.S. equities, China’s macro pulse matters less as a single-day driver and more as part of the broader year-end question: will global growth stabilize enough in 2026 to broaden the rally beyond U.S. mega-cap growth?
Forecasts and forward-looking calls released today
Monday wasn’t just about the close. It was also a heavy day for 2026 framing—particularly for the S&P 500 itself.
Citi’s 2026 S&P 500 target: 7,700 (with a wide range around it)
In one of the most market-moving forecast headlines of the day, Citigroup set a 2026 year-end target of 7,700 for the S&P 500, implying a 12.7% gain from the index’s last close referenced by Citi (6,827.41). Citi also laid out a wide bull/bear band: 8,300 in a bull case and 5,700 in a bear case—an unusually explicit reminder that volatility risk remains elevated even in a bullish base case. [17]
Citi’s thesis threads the needle between enthusiasm and caution:
- AI remains a core theme, but Citi expects leadership to rotate from “AI enablers” to AI adopters—companies that can translate the technology into measurable productivity and margin gains. [18]
- Citi estimates S&P 500 earnings per share of $320 by end-2026 (above consensus around $310), but also warns that a high starting valuation “puts increasing pressure on fundamentals” to justify price action. [19]
- With the bull market entering its fourth year, Citi explicitly expects sharper, more frequent volatility spikes. [20]
MarketWatch also emphasized Citi’s view that dispersion could rise—making stock selection more important than simply buying the index—because growth-heavy leadership will need to keep delivering exceptional earnings to sustain premium multiples. [21]
A competing 2026 narrative: cyclicals and “the economy beyond AI”
A separate strand of analysis gaining traction today: the idea that 2026 could reward investors who move beyond the most crowded AI names.
Business Insider reported that Goldman Sachs expects a meaningful acceleration in U.S. economic growth in 2026 and sees opportunities in cyclical areas like Industrials, Materials, and Consumer Discretionary—sectors that could benefit if growth broadens and earnings strength becomes more evenly distributed. [22]
What the market is watching next: Tuesday’s jobs report is the week’s first big test
With the closing bell behind us, the market’s focus quickly shifts to whether the upcoming data validates (or undermines) the soft-landing narrative that’s been supporting multiples.
Reuters’ closing recap pointed to the week’s headline items—payrolls and inflation—while the AP also highlighted how central those releases are to interest-rate expectations. [23]
Here’s the key setup for S&P 500 traders and long-term investors alike:
- If jobs data comes in cool but not collapsing, it could reinforce the “rate cuts without recession” framework that supports equities.
- If inflation looks sticky and hiring is resilient, rate-cut hopes could fade quickly—pressuring the most rate-sensitive, long-duration parts of the index.
- If the data signals a sharper labor slowdown, markets may initially cheer rate-cut odds—but then shift to worrying about earnings and recession risk.
That’s why Monday’s modest decline shouldn’t be mistaken for complacency. The market is effectively in “wait-and-react” mode.
Bottom line: the S&P 500 closed slightly lower, but the real story is what comes next
The S&P 500’s small after-the-bell decline on December 15 looks like a pause—but it’s really a referendum-in-progress on two questions that will likely define the next several weeks:
- Can the AI buildout justify the capital and valuations now embedded in the biggest index weights? [24]
- Will the next wave of economic data reinforce a glidepath to lower rates without damaging earnings? [25]
If the answers are “yes,” Wall Street’s bullish 2026 targets—like Citi’s 7,700 call—will look increasingly credible. If not, the market’s growing demand for breadth, discipline, and fundamentals could mean a bumpier path into year-end than the calm close suggests. [26]
References
1. www.tradingview.com, 2. www.tradingview.com, 3. www.tradingview.com, 4. www.tradingview.com, 5. www.tradingview.com, 6. apnews.com, 7. www.reuters.com, 8. www.tradingview.com, 9. www.tradingview.com, 10. www.reuters.com, 11. www.reuters.com, 12. www.tradingview.com, 13. www.tradingview.com, 14. www.marketwatch.com, 15. www.tradingview.com, 16. www.reuters.com, 17. www.reuters.com, 18. www.reuters.com, 19. www.reuters.com, 20. www.reuters.com, 21. www.marketwatch.com, 22. www.businessinsider.com, 23. www.tradingview.com, 24. www.reuters.com, 25. www.tradingview.com, 26. www.reuters.com
