Dow, S&P 500, Nasdaq rise as surprise ADP jobs decline reinforces Fed rate cut bets-awdailynews

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2025-12-04

Dow, S&P 500, Nasdaq rise as surprise ADP jobs decline reinforces Fed rate cut bets

US stocks shook off early losses on Wednesday as a surprise decline in private-sector employment revealed cracks in the job market, but also reinforced bets on a Fed rate cut next week.

The Dow Jones Industrial Average (^DJI) rose 0.9%, while the S&P 500 (^GSPC) added 0.4%. The tech-heavy Nasdaq Composite (^IXIC) climbed 0.2% after the major gauges finished Tuesday with gains across the board.

Investors digested the ADP report, which could add fuel to the rate-cut fire, as nearly 90% of bets sit on a quarter-point reduction from the Federal Reserve next week. Private employers shed 32,000 jobs in November, compared with expectations for a modest gain. ADP said the decline was driven by a sharp pullback from small businesses.

Meanwhile, from the Institute for Supply Management showed US services activity expanded slightly in November to a reading of 52.6%, while the index for prices paid eased to a seven-month low in a potentially positive sign for inflation. The next official update on consumer prices — the PCE print due Friday — is playing catch-up on September.

Elsewhere, bitcoin (BTC-USD) extended its bid to bounce back from a deep, weeks-long slump that pulled the token below $83,000 in recent days. The leading cryptocurrency rose to a two-week high above $93,000 on Wednesday before retracing some of its gains.

Microsoft (MSFT) helped spur an early decline in tech stocks, with its shares down over 1% after The Information reported that the software giant is lowering its AI sales quotas. That appeared to reignite investor skepticism that AI demand may not be as high as projected by Big Tech. Leading semiconductor stocks retreated, with Nvidia (NVDA), Broadcom (AVGO), and TSMC (TSM) dropping.

On the earnings front, Marvell Technology (MRVL) stock climbed 6% after the US chipmaker’s upbeat sales outlook and deal to buy Celestial AI. Shares of American Eagle Outfitters (AEO) surged 14% after the retailer’s strong start to the holiday shopping season. But Macy’s (M) shares slipped after the retailer posted a surprise profit but underwhelmed with its sales outlook amid an ongoing overhaul.

Salesforce (CRM) results are on Wednesday’s docket after the bell.

LIVE 20 updates

Former Intel CEO says big AI firms are funding themselves — and that’s not real demand

Former Intel (INTC) CEO Pat Gelsinger warned that the biggest players in AI are now funding their own growth, meaning the AI boom fueling markets may be somewhat illusory.

“The quality of that revenue that they’re committing in the future simply isn’t as good, right? Because essentially I’m buying my own future revenue,” Gelsinger, now executive chairman at xLight, said on Yahoo Finance’s Market Catalysts. “Because rather than you putting your capital at risk, I’m putting my capital at risk.”

Yahoo Finance’s Francisco Velasquez reports:

Read more here.
Treasury Secretary Bessent stops short of confirming Kevin Hassett as next Fed chair

Yahoo Finance’s David Hollerith reports:

Read more here.
Bitcoin breaks above $92,000: ‘A Santa rally is certainly not off the cards’

Yahoo Finance’s Ines Ferré reports:

Read more here.
Small-cap stocks gain as ‘seasonal stirrings’ take effect

US stocks broadly turned higher in midday trading, but small-cap stocks shone as investors increased bets on a Federal Reserve rate cut in December.

The Russell 2000 (^RUT) rose over 1%, outperforming the gains in the Dow Jones Industrial Average (^DJI), S&P 500 (^GSPC), and Nasdaq Composite (^IXIC).

Part of the rally in small caps may be chalked up to seasonality. “We’re seeing the seasonal stirrings of the small-cap outperformance,” Stock Trader’s Almanac editor, Jeff Hirsch, told Yahoo Finance on Wednesday.

Hirsch pointed to the “January effect,” the tendency for small caps to outperform large caps between mid-December and March. The name comes from the month that typically sees the greatest small-cap outperformance, January.

“Low interest rates definitely help,” Hirsch said. “I think we’ve been waiting for more than a year for small caps to wake up, and …. we’re seeing it just across the board.”

Although some strategists expect stocks to break from some of their seasonal patterns this year, Hirsch remained confident that traders will see the January effect and small caps rally into the end of the year.
Nvidia says Blackwell is ‘transforming the economics of AI’

Nvidia (NVDA) released a report on Wednesday showing how its Blackwell AI systems can scale up artificial intelligence more efficiently, just as Big Tech’s data center buildout faces a massive power shortage.

Unlike previous models that use all their parameters to generate answers for AI tools — requiring enormous computing power — Nvidia noted that leading frontier AI models use what’s called a “Mixture of Experts” architecture that’s more efficient. Examples include OpenAI’s gpt-oss-120B model, DeepSeek’s R1, and Mistral AI’s Mistral Large 3.

In a so-called MoE model, many specialized “experts” are trained for different types of tasks. Instead of activating the entire model for every query, the model selects only the experts best suited to respond, reducing the computing power required for AI tasks while still improving performance.

But today’s MoE models have some limitations — they require a lot of memory and the use of multiple AI chips at once.

Nvidia said its GB200 NVL72 AI server racks — which include 72 Blackwell GPUs, or graphics processing units (aka AI chips), and are equipped with its coveted networking technology — resolve bottlenecks to scaling MoE systems in order to improve the energy efficiency and lower the cost of AI.

Nvidia said its Blackwell system is “transforming the economics of AI at scale in power- and cost-constrained data centers” because it “unlocks” the potential of MoE models that are “moving the industry toward a future where massive capability, efficiency and scale coexist.”
Natural gas crests 3-year high as price explosion continues

Natural gas futures (NG=F) continued a significant tear higher Wednesday, hitting a three-year high of $4.996 around 8 a.m. ET.

Prices have surged by more than 20% in the past month. If the commodity crosses the $5 mark, it will be the first time it has done so since December 2022.

Prices on natural gas have spent the past several months spiking as supply has shrunk and demand has grown substantially. Not only has a cold winter pushed prices up on expectations of incoming consumer demand, but the boom in data centers seeking immense loads of power has also begun to draw on natural gas.

Getting connected to the US power grid can take years, and renewables are largely unable at their current levels to meet the high demands of data centers. Natural gas infrastructure has filled that gap, acting as a backstop while Big Tech works out permanent solutions to its power shortfall.

The US has also spent 2025 increasing its exports of liquified natural gas (LNG) as global demand has risen, reducing the amount of gas available for storage and tightening the supply side.
Netflix shares fall as streaming giant argues its bid for WBD would benefit consumers

Netflix (NFLX) shares dropped more than 6% Wednesday morning as the streaming giant attempted to preempt regulatory concerns that its proposed acquisition of Warner Bros Discovery’s (WBD) studios and streaming unit would raise prices for consumers.

The company argued that the acquisition would reduce streaming costs by bundling Netflix and HBO Max, Reuters reported.

That argument appeared to do the opposite of its intention, with Netflix shares reversing gains from the previous four trading sessions on Wednesday morning.

Adding pressure to the stock, Netflix co-founder Reed Hastings reported selling $40.7 million worth of shares on Dec. 1. Hastings also sold roughly $126 million worth of shares in the streaming giant in September and October, according to the latest SEC filing.
Chip stocks sink as AI demand fears reignited by report of Microsoft AI sales quota cuts

Big-name chip stocks sank in early trading after The Information reported that Microsoft (MSFT) is cutting sales quotas for some AI products.

AI chip giant Nvidia (NVDA) fell nearly 1%, while rival chipmaker Broadcom (AVGO) dropped 2.4% and leading contract chip manufacturer TSMC (TSM) sank nearly 1.9%. Micron (MU) — which supplies high-bandwidth memory to Nvidia for its AI systems — led the decline in chip stocks, falling 3.7%.

The Information’s report appeared to reignite investor skepticism over whether AI demand is large enough to sustain AI hardware stocks’ high valuations.
Stocks waver at the open

US stocks wobbled at the market open on Wednesday, partly recovering from steeper declines in premarket trading.

The Dow Jones Industrial Average (^DJI) and the S&P 500 (^GSPC) both dipped below the flatline. The tech-heavy Nasdaq Composite (^IXIC) fell around 0.3%.

The declines for tech came after The Information reported that Microsoft (MSFT) is lowering its quota for AI software sales. That appeared to fuel doubts over broader AI demand, with big-name chip stocks sinking in early trading. Also pressuring stocks, the ADP jobs update showed a surprise decline in private-sector employment in November.

The market action on Wednesday comes after the major indexes finished Tuesday with gains across the board.
Microsoft stock sinks after company reportedly cuts some AI sales quotas

Microsoft (MSFT) stock fell nearly 2% in premarket trade on Wednesday after The Information reported the company had cut sales quotas for some AI products.

These full-year cuts come after some sales goals were also missed in the first half of the year.

This report sent the entire market lower, with Nasdaq futures falling as much as 0.5% before the open.

The market reaction on Wednesday shows this report being seen as another sign AI products might not yet be ready for the kind of mass customer adoption — whether that be consumers or enterprise customers — that hype around the AI trade depends on.

On the other hand, this softening of what were almost certainly aggressive targets also has a people management aspect, too, as a company doesn’t want to punish a salesforce on the leading edge of an industrywide change if those same salespeople will be needed in the future to continue leading these efforts as AI products improve.

But given the state of this market, where investors have an increasing number of doubts about the stability of the AI trade against the backdrop of a slowing white collar labor market, this news does not appear to be getting the benefit of the doubt.
ADP report shows US private employers unexpectedly shed 32,000 jobs in November

US private employers shed 32,000 jobs in November, ADP reported Wednesday, marking an unexpected decline in the labor market after October’s revised 47,000 jobs gained.

The manufacturing, professional services, information, and construction sectors led the job losses. Hiring also deteriorated in small businesses, which lost 120,000 jobs during the month.

“Hiring has been choppy of late as employers weather cautious consumers and an uncertain macroeconomic environment,” ADP chief economist Nela Richardson said. “And while November’s slowdown was broad-based, it was led by a pullback among small businesses.”

ADP’s labor market update was viewed as a crucial piece of labor market data, as the Bureau of Labor Statistics canceled its October jobs report due to the government shutdown.

Stocks were relatively unchanged following the report. Prospects of Fed interest rate cuts likely offset concerns about weakness in the labor market. On Wednesday morning, traders assigned an 88% chance that the Fed would cut rates at its December meeting, compared to 83% the previous week.

Read more here.
Good morning. Here’s what’s happening today.

Economic data: MBA mortgage applications (week ended Nov. 28) ADP employment change (November); Import price index (September); Export price index (September) Industrial production (September); S&P Global US services PMI (November), final reading; S&P Global US composite PMI (November); ISM services index (November)

Earnings: Salesforce (CRM), Royal Bank of Canada (RY), Snowflake (SNOW), Dollar Tree (DLTR), Five Below (FIVE), Macy’s (M), Uranium Energy Corp. (UEC), C3.ai (AI)

Here are some of the biggest stories you may have missed overnight and early this morning:

Macy’s posts surprise Q3 profit as overhaul resonates

Bets jump on rate cuts from Trump-led Fed

Apple’s leadership shift marks a ‘major reset’ in AI strategy

Anthropic plans an IPO as early as 2026, FT reports

Salesforce stock historically cheap as AI risk takes a toll

Bitcoin hits 2-week high in cautious crypto recovery

Women are just guessing how much they’ll need to retire

Fed data suggests central bank has stopped losing money
Macy’s falls as sales guidance trails last year’s numbers

Macy’s (M) stock fell over 7% before the bell on Wednesday as its elevated sales guidance fell below last year’s annual sales numbers. But the retailer posted a surprise third quarter profit and its strongest comparable sales in three years. It also raised its financial guidance for the year.

The AP reports:

Read more here.
Apple’s leadership shift marks a ‘major reset’ in AI strategy

Yahoo Finance’s Hamza Shaban writes in today’s Morning Brief newsletter:

Read more here.
Marvell shares jump as chipmaker bolsters AI ambitions with Celestial deal

Marvell Technology (MRVL) shares climbed over 10% in premarket after its quarterly earnings beat and news the US chipmaker plans to buy Celestial AI.

Reuters reports:

Read more here.
Premarket trending tickers: GitLab, Okta, and Acadia Healthcare

GitLab (GTLB) stock fell 8% before the bell on Wednesday after reporting a loss in its latest quarter despite posting double-digit sales.

Okta (OKTA) stock dropped 4% during premarket trading on Wednesday. The cybersecurity company forecast fourth-quarter revenue above Wall Street estimates on Tuesday.

Acadia Healthcare (ACHC) fell 30% before the bell on Wednesday. The company lowered its full-year outlook, citing higher-than-expected costs from patient-related litigation.
Bitcoin hits 2-week high but crypto sentiment remains fragile

Bitcoin (BTC-USD) continued its tentative recovery on Wednesday, tapping its highest level in two weeks as cryptocurrencies more broadly look to bounce back from a weeks-long slump.

The leading token rose to about $93,965, its highest intraday level since Nov. 17. It since has pared gains to trade below $93,000.

Bloomberg reports:

Read more here.
American Eagle Outfitters stock jumps after CEO calls out ‘record-breaking Thanksgiving weekend’

American Eagle Outfitters (AEO) stock surged over 12% in premarket after the apparel retailer noted that its crucial holiday season was off to a strong start, boding well for the fourth quarter.

“Strong momentum has continued into the fourth quarter, including an excellent start to the holiday season,” CEO Jay Schottenstein said in the release late Tuesday. “We delivered a record-breaking Thanksgiving weekend, led by an acceleration in demand across brands and channels and underscored by outstanding growth at Aerie and Offline.”

For the third quarter, ended Nov. 1, American Eagle reported profit per share of $0.53, surpassing estimates of $0.43 per share. Revenue for the quarter was $1.36 billion, a 6% increase year over year and slightly better than estimates.

Overall, same-store sales increased 4%, led by an 11% increase in Aerie comparable sales, while American Eagle comparable sales grew 1%.

For the fourth quarter, American Eagle expects same-store sales to grow 8% to 9% year over year. Comparable sales are expected to increase by low single digits for the full year.
Silver notches new record as Fed rate, supply concerns pushes price higher

Bloomberg reports:

Read more here.
Anthropic opens up discussions for potential IPO in early 2026

Reuters reports:

Read more here.