US Stock Market Preview for Monday, December 8, 2025: Fed Rate Cut Bets, AI Jitters and Key Data to Watch

As Wall Street heads into Monday, December 8, 2025, the US stock market is walking a tightrope: major indexes are near record highs, traders are leaning heavily on expectations of a Federal Reserve rate cut this week, and the once-unstoppable AI trade is starting to look a little wobbly.

On Friday, the S&P 500, Dow Jones Industrial Average and Nasdaq Composite all eked out modest gains, capping a second straight positive week as a cooler inflation backdrop kept hopes for a Fed cut alive. The S&P 500 rose about 0.2% on the day and roughly 0.3% on the week, the Nasdaq gained close to 0.9% for the week, and the Dow added about 0.5%. ^[1] Year‑to‑date, the S&P 500 is up around 16–17%, according to Reuters. ^[2]

Futures trading late Sunday suggests the rally is still intact but cautious: E‑mini S&P 500 and Nasdaq futures finished Friday slightly higher and analysts describe a “bullish trend” as Dow, S&P 500 and Nasdaq futures prepare to re-open Sunday evening, with big AI names, Tesla and other growth stocks in focus. ^[3]

All of this sets up Monday as the “calm before the storm” at the start of a week dominated by the Federal Reserve’s final policy meeting of 2025.

1. Where the US stock market stands heading into Monday

A late‑stage bull market, not a melt‑up (yet)
Strategists across Wall Street broadly agree: we’re in a powerful bull market, but one that’s increasingly “late cycle” and narrow:

S&P 500 and other major global indexes sit near record highs; one recent synthesis of Wall Street outlooks calculates an 80%+ gain in the S&P from the 2022 low to today. TechStock²
A handful of mega‑cap, AI‑heavy tech names still dominate returns, while small caps and value stocks have only recently begun to show signs of life. TechStock²
RBC Wealth Management puts the S&P 500 forward P/E around 21.3×, versus a 10‑year average around 18.6×, highlighting limited room for earnings disappointment. TechStock²

An updated global bull-market overview published Sunday notes that many large banks still have 2026 S&P 500 targets in the 7,300–8,000 range, but those bullish targets are wrapped in pages of caveats about valuations, AI over‑investment and policy risk. TechStock²

In other words, Monday begins with sentiment broadly bullish, but fragile.

2. Fed meeting dominates the week—and Monday is the “set‑up” session

The single biggest driver for markets this week is the Federal Open Market Committee (FOMC) meeting on Tuesday and Wednesday (Dec. 9–10).

What markets expect

Futures markets (via CME FedWatch and LSEG data) put the odds of a 25‑basis‑point cut at roughly 84–87% as of late last week. ^[4]
That would be the third cut in as many meetings, taking the fed funds target range down to around 3.50–3.75%. ^[5]
The S&P 500 has already rallied ~16.6% year‑to‑date, and several strategists quoted by Reuters and MarketWatch argue the cut itself is “priced in;” what matters is guidance for 2026 and the pace of future moves. ^[6]

Internal Fed split = extra volatility risk

This is not a vanilla cut:

Five of the 12 voting FOMC members have publicly voiced opposition or skepticism toward further easing.
Three members of the Board of Governors favor a cut. ^[7]
If three or more officials dissent, it would be the most divided meeting since 2019—something that investors are watching closely as a signal of future policy direction. ^[8]

Reuters and Investopedia both highlight how a 43‑day US government shutdown has delayed key labor data, forcing policymakers to rely on partial information. Jobless claims have fallen to a three‑year low even as private payrolls (ADP) saw their largest drop in over two years, painting a mixed picture of the labor market. ^[9]

Several economists, including Nomura’s David Seif, warn that markets may be underpricing the risk that the Fed does not cut in December, or that Powell’s tone ends up more hawkish than hoped. ^[10]

Why this matters for Monday:
Most traders expect Monday’s price action to be shaped more by positioning ahead of the Fed than by fresh data. Schwab’s “Weekly Trader’s Outlook” characterizes the near‑term view as “neutral” for the first half of the week, with potential for “higher volatility” later, depending on Powell’s comments and key earnings like Oracle. ^[11]

3. Monday’s economic calendar: light but not empty

By high‑impact standards, Monday is relatively quiet—but not completely blank.

US data and events (Monday, Dec. 8)

According to Investing.com’s economic calendar and S&P Global’s week‑ahead preview, the key US releases are: ^[12]

Factory Orders (10:00 a.m. ET)
- Prior: +1.4%
- A key read on manufacturing demand and capex plans.
Durable Goods breakdowns (10:00 a.m. ET)
- Durables ex‑transportation
- Factory orders ex‑transportation
- Durables ex‑defense
  These help strip out volatile components to show “core” demand trends.
Dallas Fed trimmed PCE (10:00 a.m. ET)
- A regional inflation gauge that smooths out extreme price moves.
NY Fed 1‑year Consumer Inflation Expectations (11:00 a.m. ET)
- Prior: 3.2%. This survey from the New York Fed is closely watched because entrenched expectations can influence actual inflation.
3‑Year Treasury Note Auction (1:00 p.m. ET)
- Prior yield: ~3.58%. A weak auction could push yields higher and pressure growth stocks; a strong one would suggest healthy demand for US debt.

S&P Global also lists US Consumer Inflation Expectations on Monday and notes that, globally, markets will digest Germany industrial production, Swiss consumer confidence, UK jobs data, Japan’s final Q3 GDP, and China’s November trade balance. ^[13]

FinancialJuice’s US calendar notes no “top‑tier” indicators on Monday, highlighting that the big macro fireworks—CPI, PPI and the Fed decision—hit Wednesday and Thursday. ^[14]

Takeaway: Monday’s data is meaningful at the margin, especially for inflation expectations and manufacturing, but it’s unlikely to overshadow Fed anticipation unless there’s a major surprise.

4. Futures and technical backdrop: rally still on, breadth and yields in focus

Index levels and futures tone

On Friday, the S&P 500 closed near 6,870, less than 1% below its record high, while the Dow and Nasdaq also finished the week with small gains. ^[15]
December E‑mini S&P 500 futures ended Friday up about 0.2%, and December E‑mini Nasdaq futures up around 0.4%, according to futures commentary from Barchart and exchange data. ^[16]
A weekend piece from Investor’s Business Daily described the overall trend as bullish, with Nasdaq, S&P 500 and Dow futures poised to open Sunday evening pointing toward modest gains and the broader rally “near highs.” ^[17]

Yields and the global rates backdrop

Charles Schwab’s weekly outlook emphasizes that long‑term Treasury yields remain critical to the equity story:

10‑year US Treasury yields have risen to roughly 4.1%, partly influenced by a jump in Japanese government bond yields to multi‑year highs as the Bank of Japan turns more hawkish. ^[18]
Strategists like Michael Hartnett (Bank of America) warn that an overly dovish Fed—ironically—could push long‑term yields higher if investors start to worry about future inflation, potentially undermining the so‑called “Santa Claus rally.” ^[19]

For Monday: If yields drift higher in early trading, expect pressure on richly valued growth stocks; if they stabilize or ease, the path of least resistance remains upward—with the caveat that many investors may still “fade” strength ahead of Wednesday’s decision.

5. AI and mega‑cap tech: from market hero to question mark

The AI trade has been the engine of this bull market. But new reporting over the weekend suggests that sentiment is shifting in subtle but important ways.

OpenAI vs Alphabet: leadership rotation?

A Bloomberg analysis published Sunday argues that Wall Street’s view of AI bellwethers is evolving: ^[20]

OpenAI, once seen as the defining leader of the AI boom, is now under scrutiny for:
- Massive capital needs and heavy spending
- Lack of clear profitability
- Concerns it may no longer be on the absolute cutting edge of AI tech
Alphabet (Google), by contrast, is increasingly seen as:
- A deep‑pocketed, diversified AI player
- Embedded in every piece of the AI stack—from cloud to chips to consumer apps

This doesn’t mean AI is “over.” It means leadership inside the AI trade may be rotating and investors are distinguishing more sharply between profitable, cash‑rich platforms and more speculative pure‑plays.

Valuation and crash risk in AI‑driven markets

A detailed global bull-market survey updated on December 7 flags AI as both the engine of upside and the main source of risk: TechStock²+1

The S&P 500’s lofty forward P/E of ~21× is heavily driven by AI‑centric mega‑caps.
Analysts worry about “circular” AI financing—startups funded by big AI firms then turning around and spending heavily on those same firms’ hardware and cloud services.
Capacity constraints (especially power infrastructure) and the sheer pace of AI‑related capex may be unsustainable.

Several research houses outline bear‑case scenarios for 2026, including:

Earnings growth undershooting bullish expectations and forcing valuation multiples lower
Fed policy surprises if inflation re‑accelerates
A classic AI bubble unwind if revenue fails to catch up with capex

For Monday’s open, that translates into sensitivity in AI names: any news that changes the perceived durability of AI spending—or that shifts expectations for Oracle, Broadcom, or other key AI infrastructure names due to report this week—could move the whole market. ^[21]

6. Micro‑catalysts and stock‑specific stories to watch Monday

While the Fed dominates, a few company‑level stories could create pockets of volatility:

Inseego (INSG) will ring the Nasdaq closing bell on Monday to celebrate the 25th anniversary of its listing and highlight its 5G enterprise connectivity business. ^[22]
Workhorse Group (WKHS) begins trading on a 1‑for‑12 reverse split basis Monday, a move that often brings added volatility as traders adjust to the new price level and float. ^[23]
Lineage (a logistics and cold‑storage player) is hosting an Investor Forum at 5:00 p.m. ET on Monday, which could influence sentiment in industrial/logistics names. ^[24]
Schwab’s earnings calendar highlights Compass Minerals (CMP), Phreesia (PHR) and Toll Brothers (TOL) as notable reporters Monday, which may offer clues on housing, commodities and software demand. ^[25]

And from the broader IBD futures preview:

Tesla is in a technical “buy area” after reclaiming its 50‑day moving average.
New S&P 500 additions like Carvana, Comfort Systems and CRH are being closely watched as index flows reshuffle. ^[26]

Expect stock‑specific swings here even if the indexes themselves trade sideways.

7. Scenarios for Monday’s trading session

Obviously no one knows exactly how Monday will play out—but based on current positioning, here are three realistic scenarios many strategists are talking about:

1. “Quiet drift higher” (base case)

Futures open modestly green, echoing Friday’s slight gains in index futures. ^[27]
Treasury yields stay roughly flat; the dollar is stable.
Investors continue to add selectively to quality large‑caps and AI leaders, but with an eye on trimming intraday strength ahead of Wednesday.
Volumes remain lighter than average, consistent with a “wait and see” tape.

2. “Rates bite back”

A weak 3‑year note auction or higher global yields (especially Japan) push US long‑term yields higher. ^[28]
Growth and high‑P/E AI names underperform; value and financials get a relative bid.
Indexes finish mixed or slightly lower, with more damage under the surface than headline moves suggest.

3. “Early Santa”

Strong demand in the bond auction or a dovish interpretation of weekend Fed commentary sends yields lower. ^[29]
Mega‑cap tech and AI stocks lead a more decisive move higher; small caps and cyclicals join in as traders front‑run a potential “Santa Claus rally” if Powell delivers the widely expected cut without sounding too hawkish. ^[30]

In all three scenarios, intraday news—particularly any leaks or speculation around Fed deliberations, or fresh headlines on AI spending and earnings—could swing sentiment quickly.

8. How traders and investors might approach Monday (not financial advice)

Given the backdrop, many professionals are emphasizing risk management over heroics:

Keep position sizes in check ahead of the Fed. With markets already near highs and policy uncertainty elevated, several institutional outlooks recommend avoiding big directional bets until after Wednesday’s decision and press conference. ^[31]
Watch yields and the yield curve as your “tell.” Rising 10‑year yields have repeatedly short‑circuited rallies in 2025; a sharp move on Monday would likely matter more than any single data point. ^[32]
Re‑check concentration risk. Research round‑ups from RBC, UBS and others stress that many portfolios are heavily overweight a small cluster of AI‑driven mega‑caps; Monday is a natural day to rebalance before a binary Fed event. TechStock²+1
Separate time horizons. Short‑term traders may focus on intraday ranges and headlines; longer‑term investors are more concerned with whether the Fed’s updated projections and 2026 path keep the earnings‑driven bull thesis intact. ^[33]

Nothing in this preview should be taken as personalized financial advice; it’s a synthesis of what major news outlets, strategists and calendars are signaling as of Sunday, December 7, 2025.

Bottom line for Monday, December 8, 2025

Big picture: The US stock market enters Monday near all‑time highs in a powerful but narrow bull trend, heavily fueled by AI and mega‑cap tech. TechStock²+1
Macro focus: Monday’s data—factory orders and inflation expectations—will fine‑tune views but likely not overshadow anticipation of Wednesday’s Fed decision, where a 25 bp cut is expected but not guaranteed. ^[34]
Key risk: A divided Fed and elevated valuations mean markets are vulnerable to any surprise in Powell’s tone or the number of dissents. ^[35]
Trading tone: Most strategists expect a cautious, range‑bound Monday with pockets of stock‑specific volatility and every tick in bond yields watched closely.

If you’re following the open, the simplest way to think about it is this: Monday is about positioning, not resolution. The real verdict on this rally will likely come after Powell and the Fed speak later in the week.