MARKET WRAP

Stocks began the day giving back some of yesterday’s rate cut rally, with ORCL’s gap lower on earnings putting pressure on tech. But other sectors picked up the slack once again and grinded the SPX to a slight gain and a new all time closing high. On the day: SPX +0.2%, QQQ -0.4% and IWM +1.2%.

Elsewhere, a big day for gold and a new high, now over $4,300. The dollar was lower again, with DXY now $98.32. Yields were slightly lower, the US10YY is now just below 4.15%. Volatility got smoked with the VIX now 14.55, its lowest level since September.

Notable Moves Today: As has been the case a few days this week, financials, industrials, materials, healthcare displayed strength that offset some ongoing softness in tech and the AI trade. It’s possible they’re catching some year-end re-allocation flows. Small caps once again outperformed with IWM continuing its breakout.

After Hours: AVGO is higher by about +3% after hours, that’s inside the 6% expected move as of now. COST is down a tick, LULU is higher by 8.5%. QQQ’s are about +0.4% after hours on AVGO’s early move.

Today’s MRKT Call: Liz, Dan and Guy on the rate cut and the Fed’s quick pivot on buying treasuries, 2026 market targets based on bottom up calculations, year end rotations we’re seeing out of Semis into other sectors and more.

Today’s RiskReversal Pod: Dan talks with Yahoo CEO Jim Lanzone about the company’s under-the-radar turnaround, touching on its massive reach, surprising profitability, past missteps like the Google deal, echoes of the Dot-Com era in today’s AI boom, and Apollo’s playbook to prep Yahoo for a potential IPO.

MRKT MATRIX: TODAY’S TOP STORIES

• Dow jumps to record as Oracle sparks rush out of AI trade into broader market (CNBC)

• The case for more Fed rate cuts could rest on a ‘systemic overcount’ of jobs numbers (CNBC)

• Rebalanced Gold Trade Pushes U.S. Trade Deficit to Five-Year Low (WSJ)

• Disney to Invest $1 Billion in OpenAI and License Characters for Use in ChatGPT, Sora (WSJ)

• Oracle Is Having Its Own ‘Code Red’ AI Moment (Bloomberg)

• Rivian Tumbles After Unveiling AI Chip for Self-Driving Goals (Bloomberg)

• Musk says SpaceX report of 2026 IPO is ‘accurate’ (CNBC)

WHAT’S NEXT?

Vol continues to get crushed into the upcoming holiday stretch of trading, with the VIX now down to 15.50. That vol crush is hitting short duration hard following the FOMC, with several single digit implied vols early next week in SPX. You could see it today as SPX pushed up to 6900 and then spent the bulk of the afternoon pinned around that strike. If we keep grinding higher into year-end, expect more of that dynamic: tons of call supply sitting just overhead tends to cap rallies, and the long-gamma backdrop also means dips get bought quickly before they can accelerate (like this morning).

As mentioned here for over a month, if SPX keeps climbing the 7000 level feels like a natural magnet into year-end—and also the biggest area of overhead supply should we get there soon. A lot of the option-driven constraints we’re referring to here unwind at year-end, and next week’s December monthly expiration will take a big chunk of the gamma sold during the recent bounce off the table.

Tomorrow is very quiet on both the macro and earnings fronts, though we do hear from a few Fed speakers, including Goolsbee, one of yesterday’s dissenters. The expected move in SPX for tomorrow is less than 0.5% or just 30 pts in either direction. And a lot of that is likely accounting for AVGO’s earnings tonight.

• Friday, Dec 11th

  • Fed Speak - Paulson, Hammack, Goolsbee

TODAY’S EPISODES

Watch MRKT Call’s newest episode: Did The Fed Just Admit They Messed Up?

Liz joins Dan and Guy to discuss yesterday’s rate cut and the Fed’s quick pivot on buying treasuries. The discussion turns to how this affects bank stocks, then 2026 estimates based on bottom up calculations. Finally, some of the rotations we’re seeing out of Semis and into other sectors and whether that’s healthy.

• Analysis - SPX, TLT, XLF, JPM, BKX, KRE, ORCL, NVDA, SMH

• SoFi Weekly Report - What’s going on in the repo market? And what did the Fed say about growth and inflation expectations?

• John Butters / FactSet Report - The bottom price target for 2026 comes out at a +16.5% SPX move. Historically analysts have over targeted by about 6%. 

• Your Questions

  • Chris - Why don’t pundits talk about the long term inflation rate?

Learn more about our sponsors, SoFi and FactSet.

Watch RiskReversal Podcast’s newest episode: Jim Lanzone - Everything in its Right Place for a Yahoo! Turnaround

Jim Lanzone (CEO of Yahoo, former CEO of Tinder & CBS Interactive) joins Dan Nathan to pull back the curtain on one of the most fascinating turnaround stories in tech history. With 90% reach across the US internet and profitability that would make most public companies jealous, Jim explains why Yahoo is quietly dominating while the world isn't looking. They discuss the "original sin" deal in 2000 where Yahoo accidentally helped build the Google monopoly, the similarities between the Dot Com crash and today’s AI boom, and the exact playbook Apollo is using to revitalize the brand for a potential IPO.

Learn more about our sponsor Current and RBC Capital Markets.

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