U.S. stocks spent Thursday morning drifting in a tight range near all-time highs, as investors balanced optimism over an expected Federal Reserve rate cut next week with fresh clues about a cooling—but still resilient—labor market.
By late morning on Thursday, December 4, 2025 (around 11:30 a.m. ET), the Dow Jones Industrial Average, S&P 500 and Nasdaq Composite were little changed to slightly lower, giving back small early gains but remaining within roughly 1–2% of their record closing levels. [1]
Thin moves in the major indexes mask a busy backdrop: shifting rate expectations, mixed corporate earnings, and growing debate over how long this late‑cycle rally can run.
Late-Morning Snapshot: Indexes Drift Just Below Records
After two strong sessions earlier in the week—when weak private payrolls data powered hopes for more monetary easing—Wall Street started Thursday modestly higher. S&P 500 and Dow futures were up about 0.1% ahead of the opening bell, while Nasdaq futures were flat. [2]
Shortly after the open, the S&P 500 edged up about 0.1%, sitting roughly 0.5% below its record high, while the Dow added close to 100 points (around 0.2%) and the Nasdaq traded near unchanged, according to Associated Press reporting. [3]
As the morning wore on, those gains faded. By late morning, the three benchmarks hovered around flat or slightly negative territory—down roughly 0.1% to 0.2%—in line with MarketWatch and Investopedia live coverage. [4]
Despite the intraday wobble, the Dow and S&P 500 remain within about 1% of record highs, with the Nasdaq roughly 2% below its own peak, underscoring that recent weakness is more about consolidation than panic selling. [5]
Overseas, global markets were broadly constructive: European indexes traded modestly higher, and Asian markets were mixed, with Japan’s Nikkei jumping more than 2% on optimism around U.S. rate cuts and local policy shifts. [6]
Fed Rate Cut Bets Dominate Thursday’s Market Narrative
The dominant story on Wall Street today is simple:
Will the Federal Reserve deliver another rate cut at its December 9–10 meeting?
Several fresh signals are pushing investors toward “yes”:
- ADP private payrolls report: U.S. private employers unexpectedly cut around 32,000 jobs in November, versus expectations for a gain of roughly 40,000. [7]
- Layoff announcements: Challenger, Gray & Christmas data show nearly 1.2 million job cuts announced so far this year, the highest since the early pandemic era, highlighting growing corporate belt-tightening. [8]
- Weekly jobless claims: At the same time, new unemployment claims fell to about 191,000 last week, well below consensus estimates near 218,000 and the lowest since 2022, suggesting the labor market is cooling but not collapsing. [9]
Markets have seized on that mix of softer hiring and still-low layoffs as the perfect setup for more easing. The CME FedWatch tool now puts the odds of a 25‑basis‑point rate cut next week in the mid‑ to high‑80% range, according to multiple outlets tracking futures pricing. [10]
A Reuters poll of more than 100 economists, released today, echoes that sentiment:
- Roughly 82% of economists in the November 28–December 4 survey expect the Fed to cut rates by a quarter point next week, despite open disagreement among policymakers. [11]
That same poll projects inflation staying above the Fed’s 2% target through at least 2027, underscoring why some Fed officials still argue caution is warranted. [12]
Economic Data in Focus: Labor, Inflation and a “Data Desert”
Today’s trading is also being shaped by the unusual macro backdrop of late 2025:
- A lengthy U.S. government shutdown earlier in the fall delayed key economic reports, leaving investors to lean heavily on private indicators like ADP, PMIs and challenger layoff series. [13]
- Schwab’s November “Market Perspective” noted that these private data point to lukewarm overall growth, weaker manufacturing, still‑solid services and soft consumer sentiment, a combination consistent with late‑cycle conditions and growing rate‑cut chatter. [14]
Looking ahead, markets are laser‑focused on two upcoming data releases:
- The Fed’s preferred inflation gauge (PCE), due Friday
- Economists surveyed by The Wall Street Journal expect headline PCE inflation to run around 2.8% year-over-year, with the core measure (excluding food and energy) roughly steady. [15]
- Any downside surprise could further cement expectations for not just one but potentially multiple cuts in coming months.
- Delayed government jobs reports
- The official November payrolls data will only arrive after next week’s Fed decision, thanks to the earlier shutdown, forcing policymakers to rely more on incomplete private indicators. [16]
The result is a market that’s confident enough to push indexes near records, but cautious enough to trade sideways ahead of Friday’s inflation numbers and next week’s Fed meeting.
Stocks on the Move: Retail, AI and Software Steal the Show
Beneath the flat indexes, stock‑specific stories are driving notable winners and losers today.
Discount Retailers Ride the “Affordability” Wave
Earnings from value‑oriented retailers are a major bright spot:
- Dollar General (DG)
- Shares jumped roughly 6–12% across today’s coverage after the company delivered better‑than‑expected quarterly profit and maintained solid same‑store sales growth, helped by shoppers trading down in a still‑high‑inflation environment. [17]
- Five Below (FIVE)
- The discount chain beat profit expectations and raised full‑year guidance, pointing to strong holiday demand for low‑ticket gifts. The stock traded higher, with gains ranging from under 1% in early AP reporting to more robust moves in other sessions. [18]
Together, these results reinforce a key late‑2025 theme: consumers are still spending, but increasingly favouring value and discount channels.
Big Tech and AI: Mixed but Still in Charge
Tech and AI‑linked names remain central to the market’s leadership—and risk profile:
- Meta Platforms (META)
- Meta shares are up several percent after reports that the company is planning to scale back metaverse spending, pleasing investors who prefer near‑term profitability to speculative bets. [19]
- Nvidia (NVDA), Tesla (TSLA) and other megacaps
- These AI and growth bellwethers are trading mixed, with some names like Nvidia and Tesla modestly higher while others lag, reflecting ongoing debate over stretched valuations after an explosive 2024–2025 run. [20]
Commentary from market strategists today highlights that the S&P 500’s gains remain heavily driven by mega‑cap stocks, prompting calls to pay closer attention to mid‑cap and smaller companies for signs of a healthier, broader rally. [21]
Software & Cloud: Salesforce, UiPath and Snowflake
Enterprise software is another focal point:
- Salesforce (CRM)
- The Dow component is trading higher—around 1–2% up—after posting strong earnings and raising its outlook, crediting demand for data and AI‑enabled tools. [22]
- UiPath (PATH)
- Shares have surged in the high‑single‑ to low‑teens percentage range after upbeat results and guidance that topped expectations, making it one of the day’s notable winners. [23]
- Snowflake (SNOW)
- In sharp contrast, Snowflake stock is down roughly 9–11% even after beating on revenue and earnings. Softer operating‑margin guidance and decelerating product revenue are weighing on sentiment. [24]
This split underscores a key theme of the day: investors are rewarding profitable growth and punishing any hint of margin compression, even in beloved AI‑adjacent names.
Consumer Staples & Grocers: Kroger Stumbles
- Kroger (KR) is one of today’s more visible losers.
- The grocer reported weaker‑than‑expected revenue and trimmed the top end of its full‑year sales guidance, sending the stock down more than 6% in some coverage. [25]
The move suggests that even defensive, staples‑heavy names aren’t immune when investors are hyper‑sensitive to any sign of slowing top‑line growth.
Analyst Calls: Meta, Salesforce, PayPal and Others in the Spotlight
Thursday also brought a fresh wave of Wall Street analyst upgrades and downgrades, adding another layer to stock‑specific volatility:
According to 24/7 Wall St.:
- Upgrades
- Meta Platforms upgraded to Buy with a $718 price target, reflecting renewed confidence in its earnings power and AI monetization.
- Toast and AutoZone also received positive initiations, with bullish long‑term targets. [26]
- Downgrades
- PayPal was cut to Neutral from Overweight at a major bank, signalling skepticism that its turnaround can materially outpace the broader market.
- Salesforce itself was downgraded by another firm even after its earnings beat—an example of how far expectations have run in 2025 for large-cap growth names. [27]
These mixed calls reinforce the idea that stock‑picking matters more at this stage of the cycle, even as indexes sit near records.
Sentiment and Risk: Leverage, FOMO and the AI Trade
Underneath today’s calm tape, several indicators point to elevated—but still controlled—risk‑taking:
- A Reuters deep‑dive on hedge funds, published yesterday, reveals that gross leverage across many equity strategies is at or near record highs, with some prime‑broker data showing leverage of roughly three times investor capital on average and far higher for certain quantitative and multi‑strategy funds. [28]
- Major banks’ prime brokerage desks report that leverage has risen throughout 2025, particularly in trades tied to U.S. equities and the AI theme, amplifying both upside and potential downside if markets correct. [29]
At the same time, behavioural analysts are warning about FOMO‑driven decision‑making (“fear of missing out”), noting that chasing past winners at stretched valuations has historically led to lower long‑term returns. Recent commentary from Morningstar’s market column today specifically highlights how FOMO can quietly erode performance even in otherwise rational portfolios. [30]
Put together, the picture is of a market that is optimistic and heavily positioned for good news—especially on rates and AI—but increasingly vulnerable to surprises.
How Strategists See the Road Ahead
Market outlooks published in recent weeks help frame what today’s quiet session might mean longer‑term:
- Charles Schwab’s late‑November outlook emphasises that:
- U.S. growth is “lukewarm”, with manufacturing weak but services still expanding.
- Consumer sentiment is historically low, even as equities sit near records.
- The Fed has limited room for aggressive cuts if inflation stays around 3%, suggesting a slower, data‑dependent easing path into 2026 rather than a rapid pivot. [31]
- Reuters’ economist poll today points to a different near‑term nuance:
- Despite Fed officials’ public caution and worries about reigniting inflation, a large majority of economists now think the central bank will cut again in December, citing cooling labour data and the need to insure against a sharper downturn. [32]
- A series of technical and sentiment pieces published this morning (including “chart check” analyses and commentary on mega‑cap dominance) argue that:
- The rally remains narrow, with mega‑cap tech and AI names carrying a disproportionate share of index gains. [33]
- Mid‑caps and smaller stocks could benefit if falling rates eventually broaden the advance.
In short, strategists are growing more optimistic about the direction of rates, but more cautious about valuations and concentration risk.
What to Watch for the Rest of Today and Into Next Week
For traders and long‑term investors alike, several catalysts could jolt markets out of today’s relatively calm drift:
- Friday’s PCE Inflation Report
- A softer‑than‑expected reading would likely boost rate‑cut odds further and support equities, especially rate‑sensitive growth and small‑cap names.
- A hot print, by contrast, could force a swift re‑pricing of Fed expectations and put pressure on richly valued tech and AI stocks. [34]
- The December 9–10 Fed Meeting
- Markets are effectively pricing a quarter‑point cut as the base case, but forward guidance on 2026 will be just as important. Fixed‑income strategists expect a cautious tone given still‑elevated inflation and political scrutiny of central bank independence in both the U.S. and Japan. [35]
- Ongoing Earnings and Corporate Guidance
- After today’s reports from retailers and software companies, attention will shift to upcoming results from consumer, tech and industrial names, including high‑profile brands like Lululemon later today. [36]
- Bond Yields and the U.S. Dollar
- The 10‑year Treasury yield ticked up slightly toward the low‑4% area after jobless claims data, but remains well below peaks from earlier in the year. [37]
- Strategists expect higher deficits and lingering inflation risk to keep longer‑term yields from falling too far, even as the Fed trims short‑term rates. [38]
- Positioning and Leverage
- With hedge funds running near‑record leverage and AI‑centric trades crowded, any negative surprise—on inflation, policy, or earnings—could trigger sharp, position‑driven swings, even if fundamentals don’t change overnight. [39]
Bottom Line
As of late morning on December 4, 2025, the U.S. stock market is calm on the surface but intensely focused under the hood:
- Indexes are hovering near all‑time highs after a powerful rally driven largely by mega‑cap tech and AI beneficiaries. [40]
- Rate‑cut expectations for next week are high, turbocharged by cooling labour data and months of uneven growth. [41]
- Corporate news—from discount retailers to cloud‑software providers and grocers—is creating meaningful single‑stock volatility even as the broad averages barely move. [42]
- Underneath it all, leverage and FOMO‑driven positioning raise the stakes for the next batch of data and the Fed’s December decision. [43]
For now, Wall Street is waiting more than reacting—but with markets priced for good news and little margin for error, the quiet tone at 11:30 a.m. ET could change quickly as new numbers hit the tape.
This article is for informational purposes only and does not constitute investment advice or a recommendation to buy or sell any security.
References
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