Market Update – December 8th, 2025

Sound Planning Group Team

Financial Markets

Markets extended their recovery last week as investors grew increasingly hopeful for a rate cut at Wednesday’s Federal Reserve meeting. As of this morning, futures markets were pricing in just shy of 90% odds of a 25-basis-point cut, potentially fueling stocks’ optimism into the week ahead. The Nasdaq Composite led the advance with a 0.91% gain, followed by the Dow Jones Industrial Average up 0.50% and the S&P 500 rising 0.31%.

Market News

ADP Jobs Report

ADP’s November National Employment Report showed that U.S. private employers shed 32,000 jobs during the month. All of the net job losses were concentrated among businesses with fewer than 50 employees, while firms with more than 50 workers continued to add jobs.

By sector, professional services posted the largest decline with a loss of 26,000 positions, followed by information (-20,000) and manufacturing (-18,000). Smaller declines were also recorded in construction, financial activities, and other services.

In contrast, several industries reported job growth, including education and health services, which added 33,000 jobs, leisure and hospitality, which gained 13,000, natural resources and mining, which added 8,000, and trade, transportation, and utilities, which increased by 1,000. The upcoming BLS employment report, expected in mid-December, should offer additional clarity on the labor market’s direction.

Initial Claims

Initial claims fell to 191,000 for the week ending November 29th, marking the lowest level in more than three years and running somewhat contrary to the softness suggested in the recent ADP employment report. This unusually low reading may reflect several dynamics. Some workers may still be receiving severance and have not yet filed for unemployment, temporarily suppressing claims.

At the same time, a wave of retirements could be reshaping the labor market, with companies choosing not to immediately replace more senior, retiring employees. Alternatively, the reading could signal that the labor market remains more resilient than current sentiment or headline data suggest, with employment conditions still relatively strong. Additional data in the coming weeks will help clarify which factors are driving this trend.

Source: Bureau of Labor Statistics

Initial Claims

Initial jobless claims moved lower over the past two months after the temporary spike seen in early September. For the week ending November 22nd, claims were reported at 216,000, a level that remained historically low and better than economists had expected.

As shutdown-delayed data continues to be released, the report offered further confirmation of a stable labor market and did not reveal any unexpected signs of weakness.

Source: FRED

ISM Manufacturing

November’s ISM Manufacturing Index came in below expectations at 48.2%, extending the sector’s ongoing contractionary trend. Several components moved lower during the month, including new orders, employment, supplier deliveries, and backlogs, reinforcing the ongoing softness across U.S. manufacturing.

On the other hand, some categories moved higher, including production, inventories, prices, imports, and exports, but these improvements were not sufficient to counter the broader slowdown. Overall, the report pointed to a manufacturing sector that continues to face steady headwinds and remains a meaningful drag on economic momentum.

ISM Services

Unlike the Manufacturing PMI, November’s ISM Services Index came in stronger than expected at 52.6%, indicating continued expansion in the service side of the economy. Several components improved during the month, including business activity, employment, supplier deliveries, backlogs, and both new export orders and imports, suggesting that demand conditions remained generally supportive last month.

Some areas did soften, most notably new orders, which pulled back modestly. The pace of inflation also slowed, easing slightly but remaining above long-run averages. Taken together, the index pointed to a service sector that continues to make meaningful contributions to economic growth despite the softer labor market signals reflected in last week’s ADP report.

Consumer Sentiment

The University of Michigan’s December reading showed consumer sentiment rising 4.5% for the month, supported by modest gains among younger consumers and an improvement in forward-looking expectations. Labor market views also ticked slightly higher, though they remained broadly pessimistic.

Year-ahead inflation expectations fell to 4.1%, the lowest since January and a welcomed sign that price concerns may be easing. While December showed a positive uptick, confidence is far from pre-pandemic levels, suggesting households remain cautious.

Source: University of Michigan

Summary

Markets extended their recovery last week on growing optimism for a potential Federal Reserve rate cut, with the Nasdaq leading gains and the Dow and S&P 500 also advancing modestly. Economic data painted a mixed picture as manufacturing activity remained in contraction, services continued to expand, and labor market signals were uneven, with ADP reporting job losses among small firms but initial claims falling to a three-year low. Consumer sentiment improved in December, and inflation expectations eased, though sentiment remains relatively low from pre-pandemic norms.

We appreciate your continued trust.

Thank you,

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

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