Equity Markets Post Modest Declines Amid Subdued Year-End Activity

U.S. equity markets wrapped up trading slightly lower on the final session of 2025, with major indexes showing restrained weakness during light holiday volume. The S&P 500 retreated -0.14%, the Dow Jones Industrials slipped -0.20%, and the Nasdaq 100 edged down -0.25%. Corresponding March E-mini futures followed suit, with S&P contracts declining -0.14% and Nasdaq futures falling -0.22%.

Mixed Drivers Shape Market Direction

Bond market dynamics worked against equities as the 10-year Treasury yield climbed 2 basis points to 4.13%, creating headwinds for equity valuations. However, positive momentum spilling over from European markets provided a counterbalance—the Euro Stoxx 50 index scaled a 1.5-month peak, limiting the downside for U.S. equities. The day also marked the final trading session for numerous international exchanges, including those in Germany, Japan, and South Korea.

Economic Data Beats Expectations

Tuesday’s macroeconomic releases offered brighter news for market sentiment. The October S&P Case-Shiller composite-20 home price index expanded +0.3% month-over-month and +1.3% year-over-year, outpacing consensus estimates of +0.1% and +1.1% respectively. December’s Chicago PMI also surprised to the upside, surging +9.2 points to 43.5 versus expectations of 40.0. These data points provided modest support for equities despite the slight overall market decline.

Fed Communication Sends Mixed Signals

Minutes from the December 9-10 FOMC meeting revealed a slightly hawkish tone, with some policymakers favoring prolonged rate maintenance while others viewed additional cuts as potentially appropriate if inflation continues its downward trajectory. Notably, several officials flagged risks of entrenched inflation, cautioning that further rate reductions amid elevated readings could signal weakening commitment to the 2% inflation target. Current markets price just 15% odds for a -25 basis point cut at the January 27-28 meeting.

Notable Stock Performance

Pharmaceutical companies bore the brunt of selling pressure, with Insmed, Gilead Sciences, and Vertex Pharmaceuticals each declining over -1%, while Regeneron fell -0.88%. Energy equities demonstrated strength, led by Occidental Petroleum’s +2% advance and Diamondback Energy’s +1% gain. Additional gainers included Devon Energy, Halliburton, Baker Hughes, APA Corp, ConocoPhillips, and SLB Ltd—all posting +1% moves.

Standout movers included Ultragenyx Pharmaceutical, which surged +14% after recovering from Monday’s -42% plunge on analyst commentary suggesting a potential 2026 rebound. Molina Healthcare climbed +2% following investor highlight of strong operational metrics, while precious metals stocks rallied on silver prices that jumped +10%, with Newmont Mining and Hecla Mining each rising over +1%.

Citigroup declined -0.82% after announcing an approximately $1.1 billion after-tax loss on its Russian business exit, and Jabil Inc fell over -1% following insider selling activity.

Interest Rate Markets and International Bonds

March 10-year Treasury note futures closed -2.5 ticks, with yields reaching 4.128%. T-note markets faced pressure from year-end portfolio liquidation by fixed income managers and slightly hawkish Fed messaging, though modest equity weakness provided some safe-haven demand support.

European government bond yields moved higher across the board. Germany’s 10-year bund yield increased +2.6 basis points to 2.855%, while the UK’s 10-year gilt yield rose +1.2 basis points to 4.498%. Spain’s December CPI rose +3.0% year-over-year as expected, with core inflation at +2.6%—stronger than the +2.5% forecast.

Looking Ahead

The holiday-shortened week will keep market focus on U.S. economic releases. Wednesday brings initial jobless claims data (expected up +5,000 to 219,000), while Friday’s December manufacturing PMI is anticipated to remain at 51.8. Seasonally, the final two weeks of December have historically been constructive—the S&P 500 has risen 75% of the time since 1928, advancing an average +1.3%.