Tech sell-off eases and outlook for next year remains solid, but data will be watched closely this week
by Alex Nicholson and Levin Stamm
US stock futures climbed at the start of the last full trading week of 2025 as a tech selloff abated and analysts kept up a bullish drumbeat of calls for next year.
Contracts for the S&P 500 advanced 0.5% and European stocks climbed 0.7%. The 10-year Treasury yield ticked lower and a gauge of the dollar was little changed. Bitcoin rallied 1.6% to around $89,877, adding to signs that risk sentiment was steadying.
Traders are looking to delayed jobs and inflation data this week to help fill the void left by the US government shutdown as they build a picture on the economy and interest rates. Citigroup Inc. joined the upbeat chorus on the outlook for US stocks next year, while Morgan Stanley predicted Tuesday’s nonfarm payrolls numbers could give the market a boost.
A final flurry of major central bank policy decisions is also due, with meetings at the Bank of England and the Bank of Japan among others.
“With last week’s frothy risk appetite we had the debate around closing our equities overweight, but we don’t believe the trend is yet ending,” said Philipp Lisibach, head of strategy and research at LGT Private Banking. “Exposure to AI continues to be rewarded, while rates and credit remain relatively unattractive. Equities still offer the most compelling risk-reward trade.”
The US data will help answer the overarching question entering 2026 of whether the Fed is close to being done easing, after three straight cuts, or if it has to move more aggressively.
Economists project a 50,000 increase in nonfarm payrolls and a 4.5% unemployment rate, consistent with a sluggish, but not rapidly deteriorating, labor market.
“We are now firmly back into a good is bad/bad is good regime,” Morgan Stanley strategist Michael Wilson wrote in a note. “Moderate labor market weakness (as implied by recent ‘alternative’ jobs data) is likely to be received in a bullish context by equity markets,” he said.
Fed rate-cut bets were also helping lift the price of gold on Monday. The yellow metal climbed for a fifth day to around $4,345 an ounce, approaching a record high.
Bullish Calls
Citigroup strategists led by Scott Chronert said they expect robust earnings growth will deliver a 13% rally next year for the S&P 500. That implies double-digit gains for a fourth year running, and echoes optimistic forecasts by banks including Morgan Stanley, Deutsche Bank AG and Goldman Sachs Group Inc.
“We anticipate an incremental shift from AI enablers to adopters/users in 2026, setting the stage for increased productivity improvement commentary across corporates,” Chronert wrote.
Tech, health care, utilities, and banking were among the sectors Mark Haefele, chief investment officer at UBS Global Wealth Management, recommended for 2026.
Elsewhere, Chinese indexes edged lower after the latest data showed retail sales growth was the weakest since Covid, while investment slumped further. Asian shares also dropped, tracking Wall Street’s losses on Friday, with South Korea — a poster child for AI exuberance — slipping 1.8%.
Corporate News:
- iRobot Corp. filed for bankruptcy after reaching a restructuring support agreement that will hand control of the consumer robot maker to Shenzhen PICEA Robotics Co., its main supplier and lender, and Santrum Hong Kong Co.
- Mitsubishi UFJ Financial Group Inc. is nearing a deal to buy a minority stake in India’s Shriram Finance Ltd., according to people familiar with the matter, the latest foreign bank seeking to build a presence in the world’s most populous country.
- Sanofi’s experimental multiple sclerosis drug got hit with two setbacks on Monday: a regulatory delay in the US as well as a failure in a late-stage clinical trial.
Some of the main moves in markets:
Stocks
- The Stoxx Europe 600 rose 0.7% as of 10:17 a.m. London time
- S&P 500 futures rose 0.5%
- Nasdaq 100 futures rose 0.5%
- Futures on the Dow Jones Industrial Average rose 0.4%
- The MSCI Asia Pacific Index fell 0.6%
- The MSCI Emerging Markets Index fell 1.1%
Currencies
- The Bloomberg Dollar Spot Index fell 0.1%
- The euro was little changed at $1.1741
- The Japanese yen rose 0.5% to 155.08 per dollar
- The offshore yuan rose 0.1% to 7.0449 per dollar
- The British pound was little changed at $1.3382
Cryptocurrencies
- Bitcoin rose 1.5% to $89,809.51
- Ether rose 2.4% to $3,157.55
Bonds
- The yield on 10-year Treasuries declined two basis points to 4.17%
- Germany’s 10-year yield declined one basis point to 2.84%
- Britain’s 10-year yield declined three basis points to 4.49%
Commodities
- Brent crude was little changed
- Spot gold rose 1% to $4,343.45 an ounce
This story was produced with the assistance of Bloomberg Automation.
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