Fed Week Begins with Stocks, Yields Both Higher

Published as of: December 8, 2025, 9:17 a.m. ET

(Monday market open) Plenty of intrigue remains before the holidays. The Federal Reserve's rate decision Wednesday afternoon, AI-related earnings, and next week's November jobs report all could set the tone heading into 2026. Historically, major indexes often tread water before a Fed meeting, and the same could be true the next few days. Odds of a rate cut neared 90% early today, according to the CME FedWatch Tool, and major indexes ticked higher on support from  tech. 

Though the Fed is expected to slice rates for the third-straight meeting to a three-year low, Treasury yields rallied fiercely last week. A Japanese yield spike helped jumpstart the move, a possible headwind for stocks, and the benchmark 10-year Treasury note yield stayed near the top of its short-term range early Monday. A Fed rate cut, ironically, might push yields higher. "If the Fed is seen cutting interest rates when the inflation issue is still prevalent simply because the administration advocates that, then what probably will happen is long-term rates will go up as short-term rates go down," said Kathy Jones, chief fixed income strategist, Schwab Center for Financial Research (SCFR). "That's called a steeper yield curve. And that is counter to what the administration really wants to accomplish."

Higher yields can slow the economy, though equities participants didn't seem overly concerned last week. On Friday, major indexes rose for a fourth straight session and the S&P 500 index approached all-time highs after September Personal Consumption Expenditures (PCE) prices turned out mostly as expected. Core annual PCE—which excludes food and energy—was 2.8%, below consensus of 2.9% but above the Fed's 2% goal. This week's key data is tomorrow's 10 a.m. ET September Job Openings and Labor Turnover (JOLTS) report, though it's dated. Consensus is 7.2 million, a relatively high number historically that would be little changed from August. 

1. AI earnings ahead: Oracle (ORCL) and Broadcom (AVGO) put the spotlight back on AI Wednesday and Thursday after the close, respectively. Broadcom shares catapulted along with Alphabet's (GOOGL) this quarter as investors cheered Alphabet's new Gemini 3 platform. Many of Alphabet's chips are designed by Broadcom. When Oracle results arrive, focus will likely be on spending. Bloomberg reports that Wall Street is lending "massive amounts of money" to the biggest AI players. Concern centered around Oracle's borrowing to build AI helped push shares down almost 40% from their September peak. "Oracle could deliver strong results to help assuage investor concerns over AI spending, or of course they could disappoint and sour investment sentiment," said Nathan Peterson, director of derivatives research and strategy, SCFR. "Leading up to Wednesday, I feel that it's likely that markets remain in a 'wait and see' mode, which likely means some choppy sideways price action."
    
2. Treasury auctions loom amid Japan competition: Two Treasury auctions this week could help provide yield direction, with 3-year notes on the block this afternoon and 10-year notes tomorrow. Demand at recent auctions dipped, a concern as foreign yields turn more competitive. Rising yields here tend to hurt business and consumer borrowing, potentially slowing growth. "The Bank of Japan could hike this month, despite concerns about the government meddling in monetary policy," said Michelle Gibley, director of international equity research and strategy, SCFR. "Prime Minister Takaichi has made comments in the past that were not supportive of hiking rates. Add in the announcement of the largest fiscal stimulus since pandemic restrictions eased, and the yen reversed nearly all its strength this year in November. By delaying hikes and allowing the yen to weaken, this could increase inflation and intensify the need to hike rates." Investors not used to monitoring Japanese yields may want to start. If these turn lower and pull U.S. Treasury yields down along with them, that could support U.S. stocks this week, Schwab's Peterson said in his Weekly Trader's Outlook. However, Japanese yields rose another two basis points earlier Monday and are at 17-year highs.
    
3. Possible clues for direction include crypto: Bitcoin futures (/BTC) popped 2.8% early Monday and shares of crypto-related stocks including Coinbase (COIN), Strategy (MSTR), and Circle Internet Group (CRCL) also climbed in an early sign that "risk-on" might be in force today across markets. Bitcoin's 20-day moving average is just below $93,000 and may be an area to watch, as futures haven't closed above its 20-day since October 16. For a signal of risk-on versus risk-off sentiment in the markets, consider watching Bitcoin, which appeared to affect stocks when it dove early last week. Also keep an eye on gold, as some of crypto's struggles then appeared tied to traders rotating out of crypto into the yellow metal. Gold inched lower this morning but is near all-time highs above $4,200 an ounce. Volatility rose slightly this morning for stocks, a possible headwind for the early rally.

Nvidia (NVDA) and many other AI-related stocks were higher in early trading, with light gains for Nvidia and modest strength seen in Micron (MU), Broadcom, Super Micro Computer (SMCI), and ASML (ASML). 

CoreWeave (CRWV) dropped 5% ahead of the open after announcing its intention to offer $2 billion in debt that can be converted into shares. The concern is that this could dilute share values.

Marvell Technology (MRVL) dropped 7% before the open after not being listed in the S&P 500 index despite chatter that this could happen. It also got downgraded by Benchmark to Hold from Buy. Also, The Information reported that Microsoft (MSFT) is in talks to design custom chips with Broadcom, taking away its business from Marvell. 

Carvana (CVNA) jumped 9% in early trading after S&P Dow Jones Indices announced late Friday that Carvana will join the S&P 500 as part of the index's quarterly rebalancing. 

Confluent (CFLT) climbed 26% in early trading on news IBM (IBM) plans to buy the tech firm in an $11 billion deal. "With the acquisition of Confluent, IBM will provide the smart data platform for enterprise IT, purpose-built for AI," IBM CEO Arvind Krishna said in the company's press release. Shares of IBM fell 1.6%.

Salesforce (CRM) rose another 5% Friday, still getting traction from last Wednesday's solid earnings and outlook. The stock is fractionally lower in pre-market action. 

Apple (AAPL) fell slightly early Monday and is down 3.4% from its recent all-time high following the departure of several leading executives from the firm over the last week, including its heads of AI and interface design and its general counsel and head of governmental affairs. However, Wedbush raised its price target on Apple to $350 from $320 a share, saying 2026 is when Apple will gain AI traction.

Tesla (TSLA) fell 1.3% before the open. Morgan Stanley downgraded shares to Equal Weight from Overweight, citing valuation concerns. The firm also sees 2026 auto volume at 13% below consensus due to a more cautious EV industry outlook.

Toll Brothers (TOL) climbed 0.5% early ahead of post-close earnings from the home building firm. TOL and other stocks in the home builder sector have been choppy the last few months but got a boost recently from rate cut hopes. Even so, mortgage demand still seems lackluster and rates remain above 6% for a 30-year home loan. Toll Brothers focuses on the luxury market, so may benefit from the so-called "k-shaped" economy that's seen wealthier consumers spend more.

From a technical angle, resistance for the S&P 500 index shows up on the charts near 6,920, the all-time high. The Relative Strength Index (RSI) of the S&P 500 index rose to nearly 60 by the end of last week, well above the November low near 30 but still 10 points from levels typically seen as overbought.

Last week, the S&P 500 index rose 0.31%, and Nasdaq added 0.91%. The S&P 500 index begins this week up 17% for the year. 

China's trade surplus has reached $1.1 trillion this year through November. There's "very little evidence that China is suffering from the trade war," said Kevin Gordon, head of macro research and strategy, SCFR.

Catch-up changes if you're 50+: "Catch-up" contributions can help people age 50 or older save beyond standard IRS limits, making them a powerful tool for accelerating retirement savings. Starting next year, higher earners who made more than $150,000 in the prior year must make catch-up contributions on a Roth basis in employer-sponsored retirement plans. Learn more about the change and how it might affect you in Schwab's latest article.

Charitable giving strategies: It's the season of giving, and the latest episode of Financial Decoder shares insights on donor-advised funds (DAFs), including what they are and how they can be incorporated into charitable giving plans. Tune in to learn from special guest Julie Sunwoo, president of DAFgiving360™. 

The stock market has an alarm bell of sorts, and it's called the 10-year Treasury yield (TNX:CGI-candlesticks). For three months, it's traded mostly in a tight range between 4% and 4.15% (red lines). Last week, it forged its biggest weekly gain in six months to top the 50-day moving average (blue line) and test the 100-day moving average (yellow line), which coincides almost perfectly with the top of the recent range. If it moves above that this week, it could ring alarms for stocks, signaling that inflation and debt worries are outweighing the Fed's likely rate cut and potentially meaning higher borrowing costs ahead.