The stock market closed slightly lower on Tuesday, with the S&P 500 Index, Dow Jones Industrials Index, and Nasdaq 100 Index all experiencing small declines. This was attributed to higher bond yields, as the 10-year T-note yield rose by 2 basis points to 4.13%. However, losses were limited by a positive carryover from a rally in European stocks, with the Euro Stoxx 50 index reaching a 1.5-month high.
It was the last trading day of the year for many equity markets, including Germany, Japan, and South Korea. Despite this, US economic news was better than expected, supporting stocks. The S&P Case-Shiller composite-20 home price index rose by 0.3% month-on-month and 1.3% year-on-year, surpassing expectations. Additionally, the MNI Chicago PMI for December rose by 9.2 to 43.5, stronger than the anticipated 40.0.
The minutes of the December FOMC meeting were neutral to slightly hawkish, with some policymakers suggesting keeping interest rates on hold for some time. However, there were also discussions about the potential need for further rate cuts if inflation continues to decline. The markets are currently pricing in a 15% chance of a 25 basis point rate cut at the next FOMC meeting on January 27-28.
Seasonal factors are bullish for stocks, with historical data showing that the S&P 500 has risen 75% of the time in the last two weeks of December, averaging a 1.3% gain. Looking ahead, market focus will be on US economic news, with initial weekly unemployment claims and the December manufacturing PMI being key indicators to watch.
Overseas stock markets had a mixed performance on Tuesday, with the Euro Stoxx 50 reaching a 1.5-month high, while China’s Shanghai Composite remained unchanged and Japan’s Nikkei Stock 225 fell to a 1-week low. In terms of interest rates, March 10-year T-notes closed lower, with the yield rising to 4.128%. European government bond yields also moved higher, with the 10-year German bund yield increasing to 2.855%.
In terms of US stock movers, pharmaceutical companies experienced pressure, while energy companies saw gains. Notable movements included Insmed Inc, Gilead Sciences, Vertex Pharmaceuticals, Occidental Petroleum, and Diamondback Energy. Jabil Inc closed lower following insider selling, while Citigroup announced a loss on the sale of its Russian business.
In the earnings calendar for December 31, 2025, CoastalSouth Bancshares Inc, Golden Matrix Group Inc, and Immersion Corp are set to report. As always, it’s important to note that all information in this article is for informational purposes only and does not constitute investment advice.
