Market View: Week of Dec. 5, 2025

ECONOMIC REVIEW¹

In the wake of the government shutdown, more economic data points that were delayed are now being released, and although likely stale, they can provide insight into how the economy has held up over the past few months.

Among the delayed reports was the Personal Consumption Expenditures Price Index (PCE), which measures how prices changed in the past month. PCE indicated that prices rose 2.8% over the last year, slightly higher than last month’s 2.7%, but in line with what economists were expecting. Core PCE, which excludes the volatile food and energy sectors, also rose 2.8% versus last year, which matched the reading from last month, and was slightly lower than expected.

The University of Michigan consumer sentiment survey showed that sentiment increased among consumers in December, rising to 53.3, above the previous month's 51.0. Consumers also lowered their expectations for where they believe inflation will be one year from now to 4.1%, below the previous reading of 4.5%.

The ISM Manufacturing and Services reports were released, coming in at 48.2 and 52.4, respectively. Readings above 50 represent expansion, while levels below 50 represent contraction in each sector. Manufacturing remains weak, as it has for the past few years, amid weak consumer demand for goods. Services account for the majority of the US economy, and strength in the service sector has been reflective of rising wages, continued consumer spending, and expanding employment. In the most recent reading, prices also slowed their growth, implying that inflation may moderate further in the coming months.

How does the most recent economic data impact you?

PCE is the Fed’s preferred gauge of inflation, because it takes into account what an average American is likely to buy, and how the prices of those goods and services are changing. Markets are anticipating another 0.25% interest rate cut, but the Fed has signaled it will only cut rates more if inflation continues to soften. Although PCE has remained above the 2% target of the Fed, investors believe that core PCE coming in lower than anticipated will be enough to spur another interest rate cut.

ISM manufacturing and services largely confirmed a trend that was established coming out of the pandemic: consumers continue to spend on services, which has in turn fueled economic growth. However, their lack of aggregate spending on goods has weakened sentiment on the manufacturing side of the economy.

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A LOOK FORWARD¹

This week, the Fed is slated to release its final interest rate decision of the year. The Job Openings and Labor Turnover (JOLTS) report will also be released, giving investors potential insights into how the labor market is holding up.

How does this week’s slate of economic data impact you?

The decision that the Fed makes will likely drive markets for the week, with current expectations heavily in favor of an interest cut. Comments made by the Fed will also set the stage for interest rate policy in 2026.

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MARKET UPDATE²

Market Index Returns as of 12/5/2025	WTD	QTD	YTD	1 YR	3 YR	5 YR
S&P 500	0.35%	2.95%	18.22%	14.27%	22.10%	14.86%
NASDAQ	0.93%	4.16%	22.84%	19.50%	29.83%	14.44%
Dow Jones Industrial Average	0.62%	3.72%	14.58%	9.27%	14.75%	11.81%
Russell Mid-Cap	0.30%	0.74%	11.24%	4.06%	13.77%	9.22%
Russell 2000 (Small Cap)	0.88%	3.69%	14.47%	6.10%	13.25%	7.34%
MSCI EAFE (International)	0.77%	2.59%	28.38%	23.35%	15.87%	8.94%
MSCI Emerging Markets	1.42%	3.13%	31.53%	28.20%	15.22%	4.57%
Bloomberg Barclays US Agg Bond	-0.48%	0.76%	6.94%	4.72%	4.06%	-0.31%
Bloomberg Barclays High Yield Corp.	0.12%	0.86%	8.14%	7.22%	9.52%	4.64%
Bloomberg Barclays Global Agg	-0.24%	-0.27%	7.62%	5.03%	3.39%	-2.04%

OBSERVATIONS

• Global markets continued to rally, with the market broadening, as investors looked ahead to the upcoming Fed meeting. The NASDAQ led large-cap indexes (0.93%) as large-cap tech names continue to exude strong performance, but the Dow Jones was not far behind (0.62%), and the S&P 500 also rose on the week (0.35%).

• The Russell 2000 had a strong week as well, returning 0.88%, outpacing the S&P 500. Mid-cap performance, although more muted, was still positive in the week, rising 0.30%.

• International markets, both developed and emerging, saw strong performance, outpacing U.S. equities, rising 0.77% and 1.42%, respectively.

• Fixed income indices fell across the globe, as the potential for higher interest rates remained top of mind for investors. Domestic investment-grade bonds fell -0.48%, global bonds fell -0.24%, but high yield bonds had a positive week, rising 0.12%.

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BY THE NUMBERS

Netflix Buys Warner Bros Discovery
Netflix has agreed to buy Warner Bros. Discovery's TV and film studios and streaming division for $72 billion, a deal that would give the streaming pioneer control of one of Hollywood's most prized and oldest assets. The agreement follows a weekslong bidding war in which Netflix seized the lead with a nearly $28-a-share offer that eclipsed Paramount nearly $24 bid for the whole of Warner Bros Discovery, including the cable TV assets slated for a spinoff. Paramount, led David Ellison, the son of Oracle founder Larry Ellison, had been the expected leader in the fight for Warner Bros. Discovery after it kicked off the bidding war with a series of unsolicited offers. Ellison and Paramount have close ties with the Trump administration and questioned the sale process earlier this week in a letter alleging favorable treatment to Netflix. After the merger deal was announced, the Trump administration said it viewed the deal with "heavy skepticism," CNBC reported.³

The 2025 College Football Final Bracket is Set
The 2025-26 College Football Playoff bracket is officially set, giving teams a clear roadmap toward the national championship. Following a regular season filled with drama and intense conference championship battles, the top programs now shift their attention to the CFP, aiming for a shot at college football's ultimate prize. The playoff opens with four first-round games before advancing to the quarterfinals. Winners will move on to the semifinals leading up to the College Football Playoff National Championship. With only 12 spots available, there was heavy debate around including Alabama in the playoff after their 28-7 loss to Georgia in the SEC conference championship game, ahead of Notre Dame, who boasted an impressive 10-2 record, but is not affiliated with any conference.⁴