Market Update – December 22nd, 2025

Sound Planning Group Team

Financial Markets

Stocks sold off through midweek as the unemployment rate reached its highest level in over four years but rebounded on Thursday and Friday following a tame CPI report and renewed tech optimism after Micron’s strong earnings. The Nasdaq Composite led the gains, rising 0.48%, while the S&P 500 edged up 0.1% and the Dow Jones Industrial Average fell 0.67%.

Market News

November CPI

Inflation came in lower than expected for November, following the cancellation of October’s CPI release due to the federal shutdown. Headline CPI rose 2.7% year over year, while core CPI increased 2.6%, both notably lower than the prior available September readings of 3.0% for headline and core inflation.

By category, grocery prices rose 1.9% from a year ago, while dining out costs increased 3.7%. Energy prices were up 4.2% year over year, though performance varied widely, with gasoline prices rising just 0.9% annually compared with a 6.9% increase in electricity costs. New vehicle prices increased 0.6% from a year ago, used vehicles rose 3.6%, and shelter inflation slowed to a relatively low 3.0%.

There were some questions around methodology due to the missing October data, as CPI relies on changes over time and required additional assumptions by the BLS to estimate the November reading. Some economists, including New York Fed President John Williams, noted that these adjustments may have modestly distorted certain components and potentially understated last month’s inflation.

Even with those caveats, markets reacted positively to the report, with the S&P 500 rising 0.79% on Thursday, reflecting investor relief that inflation appears to remain under control.

November Jobs Report

The U.S. unemployment rate inched up to 4.6% in November, the highest level since 2021. The labor market added 64,000 jobs during the month, slightly exceeding expectations, with gains concentrated in healthcare, construction, and social assistance, while losses were seen in transportation and warehousing, as well as federal government.

The mixed signals reflect a rise in the unemployment rate even as total employment increased. This occurred because more people entered the labor force, now actively looking for jobs, so while the economy added net jobs, the larger pool of job seekers pushed the unemployment rate higher in the month.

Lastly, average hourly earnings rose 3.5% year-over-year, modestly outpacing inflation. Overall, the report paints a mixed picture, shaped in part by the delayed effects of the longest federal shutdown in U.S. history.

Retail Sales

October retail sales, delayed by the federal shutdown, were essentially flat for the month, showing little change in consumer spending. On an annual basis, sales rose 3.5%, with nonstore retailers, driven by online shopping, up 9%, and food services and drinking places increasing 4.1% from a year ago.

Overall, the report pointed to a stable, uneventful month of consumer activity and will serve as an important reference for monitoring holiday-season spending trends as more data becomes available.

AI Sentiment and Micron Earnings

As markets continued to reassess expectations around AI-driven growth, Micron, a leading global producer of memory and storage semiconductors, provided a constructive signal for the sector with its earnings last week. The company reported fiscal first-quarter results that exceeded expectations and highlighted strong demand for memory products tied to AI applications, noting that supply remains tight relative to demand.

Micron also raised its capital spending outlook and guided to improving margins as pricing conditions strengthened. MU shares rallied more than 10% following the report, supporting the tech sector and contributing to the Nasdaq Composite’s advance for the week.

Summary

Indexes were mixed last week, as growth-tilted stocks rebounded following an early selloff driven by a rising unemployment rate but later supported by a tame CPI report. November jobs and October retail data painted a mixed economic picture, while Micron’s strong earnings boosted tech sentiment and helped lift the Nasdaq Composite.

We appreciate your continued trust.

Thank you,

Joseph M. Maas,
CFA, CFP®, ChFC, CLU®, MSFS, CCIM, CVA, ABAR, CM&AA

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