Ever wake up, check futures, and feel that little jolt of optimism? That’s exactly what happened to me this morning.
S&P 500 futures were already quietly grinding higher in the Asian session, and by the time Europe opened they were pointing to another green open – the ninth gain in the last ten trading days. We’re now less than half a percent from the all-time closing high set back in October. For a market that spent November obsessing over tariffs, deficits, and “is the rally too narrow?”, that feels pretty remarkable.
A Rally That’s Finally Broadening
One of the most encouraging shifts lately has been the participation outside the usual suspects. Yes, the Magnificent 7 are still doing fine – Meta, Amazon, and Nvidia all up around half a percent premarket – but leadership is spreading. Small-caps, cyclicals, even some beaten-down consumer names are joining the party. When I saw Ulta Beauty and Victoria’s Secret both jumping double-digits on better-than-feared numbers, I thought: maybe the consumer isn’t dead after all.
That breadth matters. A market that climbs only because seven mega-cap tech names print money is fragile. A market that climbs because earnings are beating, guidance is being raised, and economic data refuses to roll over? That’s the kind of rally that can run into year-end and beyond.
Today’s Big Number: Core PCE
At 10 a.m. ET we finally get the September core PCE reading – delayed because of that bizarre government shutdown last month. Economists are looking for another +0.2% month-on-month, which would keep the year-on-year figure just under 3%. Nothing dramatic, nothing that should derail the December cut everyone is now pricing at better than 85%. But tone matters.
If we get a surprise to the upside, expect some chatter about Powell sounding less dovish next week. If it prints soft, the “cut in December and again in January” crowd will get louder. Either way, the data is old – we’re talking September numbers in December – so I suspect the reaction will be measured.
“Santa will bring presents for everybody, toys for the kids and gains for investors.”
Stephan Kemper, chief investment strategist at BNP Paribas Wealth Management
I have to admit, I smiled when I read that line. It captures the mood perfectly.
Premarket Movers You Need to Know
The tape this morning is packed with some wild individual stories:
- Cooper Companies +13% – guidance crushed estimates and they launched a strategic review (translation: someone might buy them).
- Hewlett Packard Enterprise -8% – AI server demand is still strong, but the outlook wasn’t strong enough for the crowd that bid the stock to the moon.
- Ulta Beauty +6% and Victoria’s Secret +12% – proof that the U.S. consumer can still splurge on lipstick and lingerie when they feel like it.
- Netflix -1.3% on the rumored Warner Bros. Discovery deal – historic, yes, but the market hates debt-financed acquisitions on day one.
- Rubrik +18% after raising revenue guidance and tightening loss estimates – cybersecurity remains the gift that keeps on giving.
Honestly, that list feels like a microcosm of 2025 sentiment: AI and cybersecurity crush, traditional tech hardware has to prove every penny, and the consumer is… complicated but alive.
The AI Demand Story Refuses to Die
Speaking of AI, Nvidia’s partner Hon Hai (Foxconn) reported a 26% jump in November sales. In China, Moore Threads – basically the anti-Nvidia play – soared 425% on its Shanghai debut after raising more than a billion dollars. Even with all the export-control noise, global demand for anything that can train or run large models is still insane.
I keep hearing strategists say AI capex is the new “bond vigilante” forcing discipline on tech companies. Maybe. But right now the orders are still rolling in, and that’s supporting everything from server makers to copper miners to utilities. It’s hard to bet against a theme when the receipts keep showing up.
Rates, Dollar, and the Rest of the World
Treasury yields are a touch higher this morning, with the 10-year around 4.11%. The dollar is basically flat after giving back early losses when the yen spiked on yet another “Bank of Japan will hike in December” leak. (At this point I’m convinced someone at the BoJ is running a side hustle selling option premium.)
Across the pond, the Stoxx 600 is up another 0.3%, copper is making new all-time highs, and gold is quietly pushing $4,230. Everything risk-on is working; everything safe-haven is merely keeping pace.
Why This Feels Different From November
November was all about tariff fears and “will the Fed pause?” December feels like the market has collectively shrugged and said “you know what, the economy is fine, earnings are fine, and the Fed is still cutting.” Add in the usual year-end window dressing, tax-loss harvesting rebound in beaten names, and the fact that cash on the sidelines still needs a home, and the path of least resistance looks higher.
Could PCE surprise hot and spoil the party? Sure. Could geopolitical headlines out of DC or the Middle East flare up? Always. But right now the weight of the evidence – breadth, sentiment, flows, seasonality – is bullish.
I’ve been doing this long enough to know that when the market refuses to go down on news that “should” scare it, you probably want to be long rather than fighting it.
My Takeaway for the Weekend
We’re heading into a seasonally strong period with a central bank that’s still easing, earnings momentum that’s holding up, and a rally that’s finally inviting the rest of the market to the table. The PCE print will give us a headline to chew on, but unless it’s a major upside shock I suspect the tone into next week’s Fed meeting stays constructive.
Enjoy the ride, keep an eye on breadth, and maybe let the market climb the wall of worry a little longer. Sometimes the simplest explanation – risk assets go up when liquidity is easy and growth is okay – is still the right one.
See you on the other side of the data.
