The U.S. stock market ended modestly lower Monday after a choppy, headline-driven session that underscored how sensitive investors remain to the “AI trade” and to shifting expectations for interest rates into 2026.
By the closing bell (4:00 p.m. ET), the Dow Jones Industrial Average finished at 48,416.74, down 41.31 points (-0.09%). The S&P 500 closed at 6,816.49, down 10.92 (-0.16%), while the Nasdaq Composite underperformed, ending at 23,062.96, down 132.21 (-0.57%). Small caps also softened, with the Russell 2000 at 2,533.64 (-0.70%). Volatility perked up: the VIX ended at 16.61, up 5.53%. [1]
The takeaway after the bell: the market’s leadership question is back in focus—and with a packed calendar of delayed U.S. economic releases arriving this week, traders are increasingly reluctant to take big positions until the data prints.
What drove the market after the bell
Monday’s declines came as investors balanced three competing forces:
- AI/tech fatigue and valuation anxiety after last week’s sharp tech-led drop
- Event risk from a heavy slate of economic data, including delayed jobs and inflation reports
- Policy uncertainty, from Fed messaging to intensifying speculation around who will lead the central bank next
Reuters captured the mood earlier in the session with a blunt assessment from BMO Family Office CIO Carol Schleif: the market is “struggling with where to find the leadership,” with investors wary of having “all the eggs in the AI basket” ahead of crucial labor-market data. [2]
That leadership vacuum matters because recent volatility has been unusually concentrated. Reuters commentary published Monday noted that investors were “stung” by fresh caution from major tech names last week—especially after Oracle and Broadcom helped reignite doubts about whether massive AI-related spending will deliver profits quickly enough to justify valuations. [3]
Tech and AI-linked names weighed on the Nasdaq again
The Nasdaq’s relative weakness was consistent with the market narrative that’s dominated much of December: AI winners are being re-priced in real time as the market debates ROI, margins, and the durability of hyperscaler spending.
Several high-profile moves kept that theme front and center:
- ServiceNow (NOW) sank sharply after a report it was in advanced talks to acquire cybersecurity company Armis—a potential mega-deal that appeared to raise investor questions about price, integration, and growth durability. Reuters cited the stock down nearly 12% during the session. [4] Investopedia also flagged ServiceNow as the S&P 500’s biggest decliner tied to the same reported Armis talks. [5]
- Oracle (ORCL) and Broadcom (AVGO) continued to be watched as sentiment barometers for the AI buildout after last week’s selloff. Investopedia noted both names remained under pressure into Monday. [6]
Even as the major indexes only slipped modestly, the tone in tech was clear: the market is demanding cleaner visibility on earnings and payoffs—not just capital expenditure headlines.
Big movers: Tesla rallies, iRobot collapses
While the index moves were relatively small, single-stock volatility was anything but.
Tesla jumps on robotaxi progress
Tesla (TSLA) rose after CEO Elon Musk said the company was testing robotaxis without safety monitors in the front passenger seat, helping support the consumer-discretionary complex even as parts of tech lagged. [7]
iRobot plunges on bankruptcy filing
At the opposite extreme, iRobot (IRBT) cratered after the Roomba maker filed for bankruptcy protection, a reminder that beneath mega-cap headlines, corporate stress is still surfacing in pockets of the market. Reuters described the stock as down about 70% on the news, and Investopedia detailed the Chapter 11 filing and the planned acquisition by its contract manufacturer. [8]
Sector performance: defensive leadership shows up again
Leadership rotation—rather than a broad “risk-on” or “risk-off” day—defined Monday.
In Reuters’ mid-session breakdown, healthcare was among the stronger areas while energy was the biggest drag, tracking declines in crude. [9]
That pattern fits the broader late-2025 tape: when AI/megacap tech wobbles, investors have repeatedly sought stability in defensives—without fully abandoning equities.
Cross-asset snapshot: dollar slips, bitcoin extends losses, long yields remain the macro wildcard
Markets were also digesting moves outside equities—especially currencies, crypto, and the long end of the bond market.
Dollar and crypto
Reuters reported the U.S. dollar index was slightly lower at about 98.318, while bitcoin extended a losing streak, trading around $86,205 (down about 2.6% at the time of the report). [10]
Bonds and the “rates story” into 2026
The bigger macro tension is happening in longer-dated yields. Reuters’ ROI commentary noted that 30-year U.S. yields surged last week to around 4.867%, the highest since early September, alongside a steepening yield curve—moves the columnist linked to fiscal concerns, inflation fears, and uncertainty around the Fed’s future posture. [11]
Even after the Fed cut rates last week, Reuters highlighted that long-term yields have been rising—an uncomfortable combo for equity valuations because it can lift discount rates even as the policy rate heads lower. [12]
Commodities: gold stays elevated, oil soft
Investopedia reported gold traded around $4,340/oz and remained close to record territory, while WTI crude hovered near $56.75 a barrel, down more than 1% at the time—helping explain energy’s relative weakness. [13]
The macro calendar: why this week matters more than “typical” mid-December trading
The final full trading week of the year often comes with lighter liquidity and bigger headline sensitivity—but this year, there’s an extra twist: key U.S. data releases were delayed by a government shutdown, and markets are now getting a backlog of information in a compressed window. [14]
The big items on investors’ radar include:
- Jobs reports (October and November) that were delayed and now arrive as the Fed tries to gauge whether labor-market cooling is becoming more serious [15]
- Inflation data (CPI) that will shape how soon and how far rate cuts can go [16]
- Retail sales and business activity readings that provide a reality check on growth momentum [17]
On expectations, there’s some variation between forecasters cited by major outlets. AP reported economists were looking for roughly 40,000 net new jobs in November and a 3.1% year-over-year inflation reading for November’s CPI. [18] Investopedia, citing a Dow Jones Newswires/WSJ survey, pointed to expectations closer to 50,000 jobs added and an unemployment rate around 4.5%. [19]
Either way, the market setup is clear: a “soft but not breaking” labor market is the sweet spot—cool enough to justify more easing, but not so weak it signals recession.
Fed chair speculation is quietly becoming a market factor
Beyond the data, traders are also parsing political and personnel headlines that could influence the 2026 rates path.
Reuters reported speculation has been “rife” over the next Fed chair as Jerome Powell’s term ends in May, and that expectations for a dovish successor have helped fuel bets for rate cuts next year. [20] Another Reuters item published Monday said President Trump had narrowed the shortlist to Kevin Warsh or Kevin Hassett, both seen by markets as dovish-leaning relative to a more hawkish baseline. [21]
This is not day-to-day trading noise anymore: for a market priced on forward multiples, who runs the Fed can affect the entire discount-rate regime.
Wall Street’s 2026 outlooks hit the tape today — and they’re all over the map
Monday also delivered a wave of forward-looking strategy calls—useful context because the market is increasingly trading not just on next quarter’s earnings, but on 2026 narrative positioning.
Citi: S&P 500 at 7,700 in 2026
Reuters reported Citigroup set a 2026 year-end S&P 500 target of 7,700, implying about 12.7% upside from the index’s last close cited in the report. Citi’s case leans on continued earnings growth and the idea that AI remains a dominant theme—though the firm expects leadership to shift from “infrastructure enablers” toward the companies that adopt AI most effectively. Reuters also noted Citi outlined a bull case of 8,300 and a bear case of 5,700. [22]
BCA Research: AI boom turns into an AI bust
MarketWatch highlighted a far more bearish take from BCA Research, arguing the AI spending cycle could turn into a “bust” in 2026. The piece cited forecasts including the S&P 500 ending 2026 around 5,280 and the Nasdaq Composite down roughly 31%, with a suggested trade pairing “short Nasdaq 100” exposure and long Treasuries. [23]
Goldman: the market may be missing a cyclical upswing
Business Insider reported Goldman Sachs expects U.S. growth to accelerate in 2026 and sees opportunities in cyclicalslike Industrials, Materials, and Consumer Discretionary, alongside stronger sector-level EPS growth forecasts (with tech growth moderating slightly). [24]
Put together, today’s forecasts highlight the market’s core debate heading into year-end:
Is AI a durable productivity supercycle that broadens out to the real economy—or a capex-heavy wave that disappoints on profits and triggers a valuation reset?
Bottom line: modest index losses, but a market looking for clarity
The headline numbers suggest a quiet Monday. But the internals tell a bigger story.
- The Nasdaq’s underperformance reinforces that AI skepticism hasn’t gone away. [25]
- Single-stock volatility (iRobot, ServiceNow, Tesla) shows investors are rapidly repricing idiosyncratic risk. [26]
- Macro crosscurrents—especially long-term yields, delayed data, and Fed leadership speculation—mean the “Santa rally” narrative is no longer a straight line. [27]
With jobs data and inflation next on deck, the market’s next decisive move is likely to come less from holiday seasonality—and more from whether incoming numbers support the soft-landing-plus-rate-cuts story that equities have been leaning on into the end of 2025. [28]
References
1. www.google.com, 2. www.reuters.com, 3. www.reuters.com, 4. www.reuters.com, 5. www.investopedia.com, 6. www.investopedia.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. www.investopedia.com, 14. www.reuters.com, 15. www.reuters.com, 16. www.reuters.com, 17. www.reuters.com, 18. apnews.com, 19. www.investopedia.com, 20. www.reuters.com, 21. www.reuters.com, 22. www.reuters.com, 23. www.marketwatch.com, 24. www.businessinsider.com, 25. www.google.com, 26. www.reuters.com, 27. www.reuters.com, 28. www.reuters.com
