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Wall Street enters the final full trading week of 2025 on uncertain footing. The market rally faces a critical test from a wave of delayed economic data and key earnings reports, while the high-flying AI trade shows signs of fatigue after a recent tech-led pullback.
Initial U.S. jobless claims saw their largest weekly increase since March 2020, but economists widely attribute the spike to seasonal volatility following the Thanksgiving holiday. The underlying labor market trend appears stable, supported by a steady four-week moving average, even as the Federal Reserve expresses concerns over potential weakness.
The Federal Reserve is poised to cut interest rates by 25 basis points, but the decision is overshadowed by deep internal division, political uncertainty, and market focus on the 2026 forward guidance. This has pushed the U.S. Dollar Index below 99 while equities have rallied.
The U.S. small-cap Russell 2000 index surged to a record high, signaling strong investor confidence in the domestic economy. This rally occurred amidst growing global uncertainty, as Japanese government bond yields spiked to their highest levels in over a decade on rate hike expectations.