Briefing.com Summary:
*The ADP Employment Change for November was not good, and small businesses were the reason why.
*Good earnings results from Marvell and American Eagle Outfitters have been among the early support factors.
The Dow, Nasdaq, and S&P 500 managed to score modest gains Tuesday in what was a choppy day of trading. The Russell 2000 suffered a small decline. We’ll see what this Hump Day brings, but at the moment, the indices are on track for a slightly higher open.
The S&P 500 futures are up 19 points and are trading 0.3% above fair value, the Nasdaq 100 futures are up 51 points and are trading 0.2% above fair value, and the Dow Jones Industrial Average futures are up 105 points and are trading 0.2% above fair value.
Some causal factors for the positive disposition include the following:
- An encouraging earnings report from Marvell (MRVL) has energized the AI trade.
- Strong results from American Eagle Outfitters (AEO) have added to the initial enthusiasm surrounding early reports highlighting year-over-year gains in holiday spending activity.
- Most mega-cap stocks are trading higher.
We can add rate-cut optimism to the list above, too, in the wake of this morning’s November ADP Employment Change Report, which indicated private-sector employment shed 32,000 jobs (Briefing.com consensus: 20,000) following an upwardly revised 47,000 increase (from 42,000) in October, with both the goods-producing (-19,000) and service-providing (-13,000) sectors losing jobs.
The key takeaway from the report was the understanding that small establishments (-120,000) accounted for the entirety of the November decline, likely reflecting the headwinds many are facing from higher costs and more guarded spending by low- and middle-income consumers.
The probability of a 25-basis-point cut to 3.50-3.75% at next week’s FOMC meeting is 88.8% versus 88.0% yesterday, according to the CME FedWatch Tool.
The September Import-Export Price Index didn’t dissuade from the rate-cut optimism either. Both import and export prices were unchanged month-over-month. Nonfuel import prices were up 0.2%, but notably were up just 0.8% year-over-year.
There will be more data released this morning. The September Industrial Production (Briefing.com consensus 0.1%; prior 0.1%) and Capacity Utilization (Briefing.com consensus 77.3%; prior 77.4%) report will be released at 9:15 a.m. ET and will be followed by the final November S&P Global US Services PMI (prior 54.8) at 9:45 a.m. ET and the November ISM Services Index (Briefing.com consensus: 52.4%; prior 52.4%) at 10:00 a.m. ET.
The 2-yr note yield is down three basis points to 3.49%, and the 10-yr note yield is down three basis points to 4.06%.
While there is clearly some rate-cut optimism swirling in the air, the question becomes, does this weak ADP number foment growth concerns (and earnings growth concerns) that overshadow a December rate cut that was already priced in? The behavior of cyclical and value stocks today will be telling.
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Originally Posted December 3, 2025 – Rate-cut optimism meets potential growth concerns
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