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Weekly Update: A December Cut

Weekly Update: A December Cut

December 01, 2025
Weekly Market Update
December 1, 2025


Outlook

Despite both large-cap stocks (S&P 500) and small-cap stocks (Russell 2000 Index) sitting within 1% of their all-time highs, investors and consumers remain uneasy. Stocks rallied throughout the week as several Federal Reserve officials made dovish comments1, signaling the next Fed Funds rate decision could very well be a cut. While rate cuts can indicate economic softness, investors often view them as the “medicine” needed to help stimulate growth—supporting higher stock prices.

Concerns about the economic outlook aren’t limited to just policymakers. Consumer confidence declined in November, and The Conference Board’s Chief Economist noted that “all five components of the overall [consumer confidence] index flagged or remained weak.”

With both Federal Reserve officials and consumers showing caution, what should investors make of the current environment?

We remain cautiously optimistic. Unemployment, despite some nervousness, remains relatively low at 4.4% as of September, and recent initial unemployment claims suggest little meaningful deterioration since the last reading. Corporate performance has also been solid: S&P 500 companies have grown earnings by 13.4% over the past year.2


. . .

The initial jobless claims for the week ending November 22 provided a clearer look at labor-market conditions. Claims fell by 6,000 to 216,000. This is the lowest level since mid-April and shows that layoffs remain limited. The four-week moving average also declined to 223,7503, reinforcing the view that employers are holding onto workers despite a cooling in hiring momentum. While companies appear to be more cautious about adding new staff, the broader trend in claims suggests that they are not shifting toward widespread workforce reductions. This is a sign of underlying labor-market resilience.

Consumer activity showed signs of slowing. U.S. retail and food services for September were $733.3 billion, which is up just 0.2% from the month prior. This is down from the August increase of 0.6%. On a year-over-year basis sales were up about 4.3%.4 At the same time, consumer confidence weakened. The Conference Board’s headline index fell to 88.7, which is down 6.8 points from 95.5 in October.5 This is also its lowest level since April. The decline in consumer confidence underscores increasing caution among households as they navigate high prices, borrowing costs, and broader economic uncertainty.

[1] Fed Rate Cut in December May Be More Likely as Officials Signal Support - The MortgagePoint, Fed Chair Powell’s Allies Provide Opening for December Interest-Rate Cut - WSJ, Fed's Miran ties rising unemployment to current setting of monetary policy - Fox Business | Reuters

[2]https://www.factset.com/earningsinsight

[3] News Release

[4]Monthly Retail Trade - Sales Report

[5]US Consumer Confidence

Upcoming Reports

Monday: Manufacturing PMI, ISM Manufacturing Prices, Fed Chair Powell Speaks

Tuesday: JOLTS Job Openings

Wednesday: ADP Nonfarm Employment Change, Services PMI, Crude Oil Inventories, ISM Non-Manufacturing PMI, ISM Non-Manufacturing Prices

Thursday: Initial Jobless Claims, FOMC Member Bowman Speaks

Friday: Core PCE Price Index (MOM), Core PCE Price Index (YOY), Consumer Credit

Market Performance Stats

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