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- š„ Inflation Cools, Markets Heat UpāBut There's a Catch
š„ Inflation Cools, Markets Heat UpāBut There's a Catch
Micron's AI-fueled blowout has tech bulls cheering, while Nike and FedEx's dismal results reveal the ugly truth about Main Street spending...
Jason Paloma
December 19, 2025 ā¢ Estimated Reading Time: 15 minutes
š Market Vibes
š„ Inflation Cools, Markets Heat UpāBut There's a Catch
The S&P 500 just snapped a four-day losing streak after November's CPI came in at 2.7%āwell below the 3.1% forecast. Traders are celebrating, but two major earnings reports dropped after the bell that tell a very different story about consumer health. Micron's AI-fueled blowout has tech bulls cheering, while Nike and FedEx's dismal results reveal the ugly truth about Main Street spending. Here's what actually matters for your positions heading into year-end.
š¤ Markets Stage Modest Rally as Inflation Data Keeps Rate Cut Hopes Alive
Happy Friday, traders - and what a week to close out. The S&P 500 opened around 6,778 this morning, climbing nearly 1% on Thursday after that sweet inflation print came in cooler than expected. The Nasdaq kicked things off near 23,006, while the Dow opened at roughly 47,952. Not exactly fireworks, but hey, we'll take green over red any day.
November's CPI landed at 2.7% year-over-year - down from 3% and below the 3.1% analysts were bracing for. Core inflation? Also chilled out to 2.6%, its lowest since March 2021. Sure, there's a government-shutdown-shaped hole in the October data, but market observers note this as potentially supporting additional Fed rate cuts in 2026.
The Consensus: Currently, traders are pricing about a 25% probability of a January rate cut, with odds jumping above 50% by March according to the CME FedWatch Tool. Markets assign near certainty to at least one cut by April 2026.
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š Chip Stocks Get a Lift as Micron Crushes Expectations
Speaking of tech, Micron Technology shares surged over 16% on Thursday after the company delivered better-than-expected fiscal first quarter earnings and revenue on Wednesday evening, plus an optimistic outlook for the current period. In a market starved for tech leadership, Micron's results "injected missing vigor" into the sector, according to Charles Schwab strategists. It's about time someone showed up to the party.
The chipmaker's performance underscores the ongoing demand for AI infrastructure and data center buildouts. Micron's results highlight that while the broader market wrestles with macro headwinds, pockets of growth still exist in the technology sector - you just have to know where to look.
The Reality: Despite tech sector volatility, memory chip demand from AI data centers remains robust. Micron's strong guidance signals that semiconductor supply constraints continue supporting pricing power, even as broader economic uncertainty weighs on consumer tech spending.
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āØ Gold Keeps Glittering Near Record Highs While Bitcoin Stays Bruised
Gold traded around $4,320 per ounce Friday morning, flirting with its October record high and on track for a second straight weekly gain. The cooler inflation data strengthened expectations for potential Fed rate cuts, which typically supports the yellow metal since lower rates reduce the opportunity cost of holding non-yielding assets. Gold has surged roughly 65% this year - its strongest annual performance since 1979. Not bad for a dusty old relic, huh?
Meanwhile, Bitcoin continues hovering around $87,000, still down roughly 30% from its October all-time high above $126,000. The crypto king has struggled to find its footing amid concerns about the unwinding of the yen carry trade and broader risk-off sentiment. Despite all the "digital gold" narratives, BTC is behaving more like a high-beta tech stock than a safe haven.
The Divergence: While gold holders have enjoyed a 65% gain this year, Bitcoin investors are down roughly 9% in 2025 according to CNN Business. The traditional safe haven is living up to its reputation while the digital alternative struggles to prove its value proposition during uncertainty.
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š«Ø Oil Wobbles Below $56 as Peace Talk Hopes Weigh on Energy
WTI crude oil traded around $55.86 per barrel Friday, continuing its short-term downtrend and hovering near the week's low of $54.87. Growing expectations of a peace deal between Russia and Ukraine are outweighing concerns about potential supply disruptions from the U.S. blockade of Venezuelan oil tankers according to Yahoo Finance. Oil has been stuck in a bearish pattern, with technical analysts eyeing the lower Target Zone between $53.97 and $53.13 as the next level if selling pressure continues.
The energy sector remains caught between recession fears (which crush demand) and geopolitical tensions (which threaten supply). For now, demand worries appear dominant. WTI has fallen roughly 17% year-to-date as trade tensions reignite fears of a global slowdown.
The Trade-off: Analysts at Bank of America note that lower oil prices could curb supply growth, which might prevent a sharper decline - essentially, if prices fall enough, producers may pump less, creating a natural floor. However, recession risks remain the dominant narrative in energy markets heading into year-end.
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š Nike and FedEx Stumble After Hours, Setting a Cautious Tone
After the bell Thursday, Nike and FedEx delivered earnings reports that fell short of inspiring confidence. Nike dropped over 11% in premarket trading Friday after reporting shrinking quarterly margins and a sixth consecutive quarterly sales decline in Greater China. Revenue fell to about $11.3 billion from $12.43 billion a year ago, while diluted earnings per share tumbled 30% to $0.54. Under new CEO Elliott Hill, Nike is attempting a turnaround strategy, but consumer spending remains stubbornly weak.
FedEx wasn't much cheerier, with shares slipping 1.4% after CFO John Dietrich warned that current-quarter earnings would be lower than Q2 results due to MD-11 groundings, costs tied to next summer's freight trucking spin-off, and other headwinds. While FedEx managed modest Q2 growth and continues benefiting from its DRIVE cost-cutting program, the muted outlook suggests the shipping giant sees a bumpy road ahead for global commerce.
The Pattern: These reports underscore a broader theme emerging across sectors - consumer-facing companies are struggling while enterprise tech thrives. Nike's challenges point to subdued consumer spending, FedEx signals cautious business activity, yet Micron's AI-driven results show where growth is hiding according to market analysis.
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š š¼ The Santa Rally That Wasn't - Or Is It?
So here we are at the doorstep of the holidays, and Wall Street's fabled Santa Claus rally is looking more like Santa got stuck in the chimney. December is historically kind to equity investors, but 2025 may break the pattern according to strategists. The year has seen unusual volatility - from an early AI-related "DeepSeek" meltdown to surprise tariffs announced in April. Options market data show investors buying more downside protection rather than betting on a straightforward year-end grind higher.
Still, the S&P 500 remains up a solid 14% year-to-date and sits only about 3% above its November 20 low close of 6,538. The index is roughly 2% below the late October record high. Tech leadership has been spotty, crypto has been a disaster, but the broader market has shown resilience.
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š The Bottom Line
Friday's trading session sets up as a tug-of-war between positive inflation data and disappointing consumer-facing earnings. The S&P 500's modest opening gain suggests markets are leaning optimistic for now, but with Nike and FedEx's warnings echoing in the background, don't expect any victory laps just yet. Gold continues to benefit from safe-haven demand and rate cut expectations, while Bitcoin remains stuck in no-man's-land, unable to convince anyone it's either digital gold or the next big thing.
As we head into the final stretch of 2025, market observers note to stay selective, watch for genuine catalysts, and don't confuse a relief bounce with a sustainable rally. Tech stocks with AI exposure continue to outperform consumer discretionary plays, and that divergence isn't going away anytime soon. Whether we get a Santa rally or just a lump of coal depends largely on how the next few economic data points shake out - and whether Wall Street can shake off its year-end jitters.
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