Pre-markets Flat on New Year's Eve Eve

Tuesday, December 30, 2025

Stock market indexes have gotten a tad “Scroogey” following the earlier-than-expected Santa Claus rally last week. Yesterday, we saw a half-point drop amid low volume as investors booked gains at the end of another strong year. We’re still +21% on the Nasdaq year to date, and up double digits on the major indexes elsewhere.

We have seen lots of good news in what early on was shaping up to be a problematic 2025. Early April “Liberation Day” tariff initiatives notwithstanding (as they got rolled back in a hurry following a week of plummeting market returns), we’re so far averaging +2.5% GDP growth following Q3’s +4.3%, which was the healthiest economy we’ve seen since Q3 2023. In fact, the +2.5% we’re riding currently is a notch better than the +2.4% we saw through all of 2024.

That’s not to say there aren’t concerns on the horizon. Even though we saw a CPI Inflation Rate come down 30 basis points (bps) in the most recent print to a reasonable (but still not optimum) +2.7%, many analysts believe we are looking at incomplete data, and the Inflation Rate may be revised upward — perhaps by more than 30 bps — just as tariff effects begin to hit U.S. trade goods.

The employment situation is another source of concern. Even though we see benign prints in Weekly Jobless Claims, these tend to mask the low turnout in new hires, which are roughly -100K from where they were a year ago. Even as the retirement boom cools to sub-100K per month, we still do not appear to be covering for those exiting the workforce. And we’re not even counting recent graduates who remain unemployed months or years after leaving school; they were never considered part of the workforce to begin with.
 

Home Prices Improve in Yesterday’s Reports

We saw both Pending Home Sales for November and Case-Shiller Home Prices for October yesterday, and both came in positive. For Pending Home Sales, we saw a surprise bump to +3.3% from the previous two months in negative territory, and +2.6% was the third-strongest in the past 12 months. Case-Shiller prices grew +1.1% this past fall, reversing three previous months of losses. This is good news for home sellers; not as much for those looking for further evidence that inflation is coming down.
 

What to Expect from the Market Today

After the opening bell, we’ll get a new installment from the Chicago Business Barometer. Here’s where we can use a bit of good news: last month’s +36.3% print was the lowest since May of 2024, and the 24th month below the 50-threshold between gain and loss. These numbers do tend to jump around a bit, but anything above +40% would likely be welcome.

The minutes from the last Federal Open Market Committee (FOMC) meeting are out as of 2pm ET today. These notes will highlight the differences in thinking regarding where interest rates ought to be headed: Fed Governor Stephen Miran — on loan from President Trump’s White House — for the thirds time in a row advocated a -50bps rate cut, while Fed Presidents from Chicago and Kansas City — Austan Goolsbee and Jeffrey Schmid — voted for no change to the Fed funds rate.

The smart money is currently on a pause at the next FOMC meeting in late January. The Fed skips February and moves to March with the subsequent meeting, so it will be anyone’s guess what happens then; so much is tied to inflation and employment reports, of which there with be several by March 18th. For today’s minutes, we look for confirmation of this sentiment, but of course will take note of any outliers.

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