Midday market update: Cyclicals lead as investors await the Fed

Introduction#

U.S. stocks are trading mixed into the lunch hour on Wednesday, December 10, 2025, as investors position ahead of the Federal Reserve’s final policy decision of the year. According to Monexa AI intraday data, the S&P 500 (^SPX) is essentially flat, the Dow (^DJI) is higher, and the Nasdaq Composite (^IXIC) is modestly lower, reflecting a rotational risk-on tone favoring cyclicals over mega-cap technology. Fed day dynamics are front and center: Reuters reports markets widely expect a third consecutive 25 bp rate cut, but with heightened focus on the message around the path for 2026 and any hint of a “hawkish cut.” See: Reuters.

From the opening bell through midday, breadth has leaned constructive in cyclical pockets—Consumer Cyclical, Industrials, and Basic Materials—while Energy, select defensives, and parts of Tech lag. Volatility is slightly firmer, consistent with a market that is cautiously bullish but sensitive to the Fed’s wording later today.

Market Overview#

Intraday Indices Table & Commentary#

According to Monexa AI, the S&P 500 is navigating a tight intraday range between 6,822.93 and 6,849.43. The Dow is outperforming with a +0.40% gain, while the Nasdaq Composite is down -0.33% as large-cap Tech shows mixed internals. The NYSE Composite is up +0.51%, suggesting positive participation outside of a handful of mega caps. Implied volatility is firmer into the policy event: the CBOE Volatility Index (^VIX) is up +0.65% and the Russell 2000 Volatility (^RVX) is up +0.32%, a typical Fed-day posture as traders brace for guidance and potential intraday swings.

Volume context supports a wait-and-see stance. Monexa AI data shows the S&P 500’s composite volume at roughly 2.77 billion shares versus an average of 5.46 billion, indicating room for a decisive move when the FOMC statement hits and Chair Powell speaks later in the day. Historically, December Fed days have skewed modestly positive, but the tone of communication can override seasonal tendencies. See: Reuters.

Macro Analysis#

Economic Releases & Policy Updates#

The macro calendar is dominated by the FOMC. Consensus expects a 25 bp rate cut—the third straight—bringing the target range down another notch, while the market will parse any indication the Committee may pause in early 2026 or slow the pace of easing. Reuters notes the risk of a “hawkish cut,” where policymakers reduce rates but signal a higher bar for further cuts or emphasize data dependence. See: Reuters. Into midday, implied volatility has edged higher and the Nasdaq is soft as investors trim exposure in expensive mega-cap Tech while rotating into cyclicals that benefit from lower funding costs and resilient demand.

On the labor front, job openings in October registered 7.7 million, essentially unchanged and indicative of a labor market that continues to cool gradually. According to Monexa AI’s summary of the morning prints, investors treated the data as neutral for the rate path, keeping focus squarely on Fed language around inflation progress and labor-market balance later today.

Market participants are also watching the bond market’s crosscurrents. According to Monexa AI’s aggregation of street commentary, Apollo’s Torsten Slok highlighted the “mystery” of rising long-end Treasury yields in recent weeks, cautioning that the move deserves attention as it may reflect supply, term premium, or growth/inflation expectations reasserting themselves. The setup adds complexity to today’s decision because a hawkish-sounding cut could keep the back end sticky, with knock-on effects for duration-sensitive equities and REITs.

Global/Geopolitical Developments#

North of the border, the Bank of Canada held its policy rate at 2.25%, with Governor Tiff Macklem reiterating that uncertainty remains elevated and data volatility complicates the reading of underlying momentum. Coverage via Kitco underscored the cautious message. See: Kitco News. While the BoC is not a primary driver of U.S. equities, the parallel emphasis on uncertainty reinforces the global central-bank message: easing is proceeding, but with guardrails.

Domestic policy chatter around Federal Reserve leadership has picked up, but as of midday it remains a background factor rather than a tradable catalyst. Markets are focused on near-term policy guidance and its implications for rates, the dollar, and risk assets.

Sector Analysis#

Sector Performance Table#

According to Monexa AI’s sector tape, cyclicals are doing the heavy lifting into midday. Consumer Cyclical, Industrials, and Basic Materials are leading, helped by strength in retail, travel, machinery, and steel. Financials are also bid, with banks and card networks outpacing alternative managers. Conversely, Energy, defensives, and select rate-sensitive pockets in Real Estate and Utilities are soft, while Technology is fractionally lower amid mixed leadership.

There is a notable discrepancy between the quantitative sector performance table above and intra-sector breadth observations from the heatmap. The heatmap shows Communication Services as modestly positive and Utilities slightly higher, driven by idiosyncratic outliers, whereas the sector performance table prints both sectors lower at midday. We prioritize the tabulated sector performance figures for directional calls and treat the heatmap as a breadth and dispersion lens; the divergence suggests heavy stock-specific moves are skewing internals even as the sector-level price data leans lower.

Within Technology, the tape is split: mega caps are mixed and several mid-cap names show outsized moves. According to Monexa AI, MSFT is down about -2.29% and NVDA -1.23%, while AAPL is up +0.56%. Hardware-centric STX is up +3.58%, and rideshare platform UBER is off -5.13% after a corporate update on airport kiosks that appears not to change the earnings outlook near term. The split is capping the Nasdaq despite constructive breadth elsewhere.

Communication Services is choppy with dispersion: WBD is up +4.59% on renewed deal speculation, DASH is down -3.51%, META is off -0.66%, while Alphabet’s GOOGL and GOOG tick slightly higher. In Consumer Cyclical, leadership is clearer: AMZN +1.70%, NKE +2.79%, LKQ +4.86%, and BKNG +1.04%, while TPR lags -1.64%.

Financials are buoyant, with JPM +1.83%, AXP +2.28%, and MA +0.90%, offset by weakness in alternative-asset managers like BX -3.20% and traditional asset managers such as T. Rowe Price (-3.11%). Crypto-adjacent COIN is lower by -1.67%, indicating risk-sensitive fintech is not participating in the rotation.

Healthcare shows selective strength in medtech and biotech, even as the sector prints slightly lower intraday. BDX +3.85%, REGN +3.12%, and JNJ +1.93% advance, while ISRG -1.20% drags. MRNA adds +1.43%.

Industrials are a point of strength, with CMI +2.21%, CAT +1.62%, and GNRC +2.87% leading. High-margin aerospace supplier TDG is an outlier to the downside at -2.96%, while diversified ETN is up +1.48%.

In Consumer Defensive, the pack is split: branded staples rally while staples retail softens. PEP +3.05%, TSN +3.00%, and EL +2.82% advance, contrasted with COST -1.25% and KR -2.46% lower.

Energy is the only sector broadly in the red, a mix of midstream and E&P weakness offset by some strength in integrateds. COP +1.84%, CVX +1.25%, and XOM +0.60% are higher, while gas-focused EQT -1.79% and pipeline operator KMI -1.61% weigh on the group.

Utilities reflect the same dispersion theme; the group is down on the day per sector-level data, but GEV is a dramatic outlier at +14.12%. NEE +0.95% and SRE +1.04% gain, while VST -1.59% and AEP -1.05% lag.

Real Estate is marginally lower with towers and logistics REITs offsetting weakness elsewhere: PLD +0.86%, AMT +1.19%, CCI +1.47%, while data-center DLR -1.41% is softer and SBAC +1.10% participates.

Basic Materials is firm thanks to specialty chemicals and steel: ALB +2.06%, NUE +1.97%, STLD +1.79%, DOW +1.75%, while fertilizer producer MOS -1.42% underperforms.

Company-Specific Insights#

Midday Earnings or Key Movers#

Commodity leverage and analyst actions are driving several notable individual moves. In Energy, XOM is benefitting from supportive sell-side commentary. According to Monexa AI’s aggregation of analyst notes, BNP Paribas upgraded the stock to “Hold” and Morgan Stanley set a $137 price target, with trading volume surging roughly +48% and the shares up intraday earlier in the session. The move stands out because Energy as a sector is down, highlighting relative strength in integrated and advantaged upstream names.

In Materials, Brazil’s VALE is cited by Monexa AI as surging in recent sessions, with stock-specific momentum linked to a record-quarter iron ore production of 94.4 million metric tons and an upgrade to “Outperform” by RBC. That commodity-linked leadership aligns with the firm tone across U.S. steel and specialty chemical peers.

Among retailers and consumer names, the setup into earnings is front of mind. COST reports tomorrow with Wall Street expecting Q1 FY26 revenue of $67.28 billion and EPS of $4.25, while net sales trends have shown +8.2% growth and digital sales up +20.5% in recent monthly updates, according to Monexa AI. Shares are down -1.25% intraday amid a broader defensive rotation, putting more weight on membership fee commentary and gross-margin mix in Thursday’s report. Meanwhile, LULU also reports tomorrow; Monexa AI notes consensus EPS of $2.22 on $2.48 billion in revenue, with the stock down sharply year to date but supported by healthy free cash flow.

Auto parts retailer AZO remains a volatility magnet this week. Roth reiterated a Buy and set a $4,650 target while the company’s latest quarter missed Street expectations, with some analysts trimming forecasts. The tug-of-war underscores a broader theme this season: earnings dispersion and shifting guidance are dominating single-stock outcomes more than factor beta.

In convenience retail, CASY delivered Q2 FY26 revenue of $4.51 billion (+14.2% y/y) and EPS of $5.53, beating consensus, and RBC nudged its price target to $591 with a Sector Perform stance, according to Monexa AI. Prepared foods and private-label mix remain key swing factors for margins into 2026.

Specialty vehicle maker REVG reported EPS of $0.83, topping estimates, on sales of $664.4 million. Monexa AI highlights a debt-to-equity ratio of 0.13 and a P/E of 28.36, reflecting a strengthened balance sheet and improved investor confidence in the cycle for emergency and commercial vehicles.

In Healthcare, CVS saw a flurry of rating updates ahead of year-end. UBS set a $97 target and Wolfe Research lifted its target to $100 even as Zacks shifted to Hold—an illustration of ongoing debate around medical cost trends, PBM transparency, and Medicare Star ratings. The stock’s re-rating potential will depend on 2026 profit cadence, which Reuters flagged as improving in recent guidance updates. See: Reuters.

In Metals, CMC secured an upgrade to Buy from Jefferies, with Monexa AI noting expectations for an 87.5% earnings surge into FY26 and a share price near $66. The setup is consistent with the broader steel strength mid-session.

Energy infrastructure and LNG developer NFE is in focus ahead of earnings. Consensus calls for EPS of -$0.89 on $548.13 million of revenue, with Monexa AI flagging a high debt-to-equity ratio of 9.35 and a current ratio of 0.17. A recently secured seven-year gas supply agreement with Puerto Rico supports forward revenue visibility, but investors are laser-focused on liquidity and execution.

Networking equipment provider CIEN is due to report as well, with Street expectations for EPS of $0.77 (+40.7% y/y) on $1.29 billion of revenue (+14% y/y). Monexa AI highlights a debt-to-equity ratio of 0.09, making CIEN a name to watch in a Tech tape where cash flow durability and order visibility are increasingly prized.

Across the media complex, WBD is extending gains amid renewed M&A chatter and competitive jockeying, per Monexa AI’s newsflow recap. The bid-driven moves emphasize the idiosyncratic nature of Communication Services today.

Precious-metals royalty company GROY is higher following a new $5.50 price target from National Bank and an announced equity raise of $90 million at $4.00 per share, a profile that benefits from the year’s momentum in gold and silver. The offering price and metal price path will anchor near-term trading.

Extended Analysis#

Intraday Shifts & Momentum#

From the open to midday, the market has leaned into a “cautiously bullish rotation” rather than a broad risk-on. The Dow’s outperformance versus the Nasdaq and the S&P’s flatline mask meaningful under-the-surface leadership changes. Cyclicals are advancing with banks, cards, machinery, and steel in gear, while the most richly valued corners of mega-cap Tech have been used as a source of funds ahead of the Fed. The modest rise in implied volatility (^VIX +0.65%, ^RVX +0.32%) mirrors standard pre-FOMC positioning, with realized intraday ranges subdued and volumes below the daily average, preserving dry powder for a potential post-statement repricing.

Within Technology, the split between platform-scale leaders and mid-cap beneficiaries of AI infrastructure continues to define the narrative. MSFT and NVDA are both modestly lower, consistent with investors de-risking ahead of Powell’s Q&A. Meanwhile, storage provider STX is among the day’s winners, reflecting the demand pull from data-center capex. The net effect is a Nasdaq that trades heavy even as overall market breadth improves.

Financials’ strength—JPM, AXP, and MA—aligns with a soft landing or re-acceleration scenario priced in by cyclicals. A cut that is framed as “insurance” rather than reactive could keep the group supported; by contrast, a hawkish-sounding cut that reopens the debate on the depth of 2026 easing could lift the front end of the curve and compress multiples for rate-sensitive financials. Reuters emphasizes that today’s key tell will be any changes to the Fed’s language on inflation progress and labor slack as markets parse whether the bar for additional cuts has risen. See: Reuters.

Defensive sectors are not acting uniformly. Branded staples like PEP and TSN are bid, but staples retail is under pressure (COST and KR, hinting at a rotation within defensives that favors margin-protected brands over low-margin retail models ahead of a key earnings print. Utilities are also a microcosm of dispersion: GEV is up sharply while the sector screen prints lower, underscoring how single-name catalysts can distort breadth signals.

Energy is the session’s cleanest underperformer. Despite strength in CVX, COP, and XOM, weakness in midstream and gas-weighted E&Ps leaves the sector modestly negative. A sticky long end would challenge high-dividend profiles and capital-intensive models; conversely, a more dovish interpretation of the Fed could lighten the pressure on high-beta Energy equities, particularly those with balance-sheet strength and advantaged assets.

The overarching message into midday is that this is not a “one-factor” tape. Company-specific catalysts—earnings beats at REVG, rating changes at XOM and CMC, and bid speculation around WBD—are driving outsized moves, while sector rotation and positioning for the Fed are setting the broader contours. For investors, that argues for prioritizing single-name research and respecting dispersion, while using indices tactically around the policy headlines.

Conclusion#

Midday Recap & Afternoon Outlook#

At midday, the Dow leads, the S&P 500 is flat, and the Nasdaq is lower, with cyclicals in front and Energy and select defensives lagging. Volatility is slightly higher, a standard Fed-day pattern. The market is prepared for a 25 bp cut, but—as Reuters highlights—the key question is how Chair Powell frames the path for 2026. A “hawkish cut” that emphasizes a higher bar for future easing could sustain the split tape: cyclicals may hold up if growth signals remain intact, while rate-sensitive assets and valuation-rich Tech could face renewed pressure. A more benign, data-dependent message that acknowledges inflation progress may compress volatility and broaden the advance, with the Nasdaq catching a relief bid.

Key afternoon catalysts include the FOMC statement and dot-plot nuances, Powell’s press conference, and any shifts in the market-implied path for the policy rate as tracked by major media and rate monitors. Liquidity and volatility dynamics suggest traders have capacity to add risk post‑event; the direction will be set by the tone of the guidance.

Key Takeaways#

• According to Monexa AI, U.S. equities are mixed at midday: ^DJI +0.40%, ^SPX +0.02%, ^IXIC -0.33%, with ^VIX +0.65% and ^RVX +0.32% ahead of the Fed.
• Sector rotation favors cyclicals (Consumer Cyclical +0.77%, Industrials +0.63%, Basic Materials +0.50%, Financial Services +0.35%) while Energy (-0.30%) and defensives lag.
• Technology leadership is split: AAPL stabilizes while MSFT and NVDA ease; mid-cap STX is a standout gainer.
• Company-specific catalysts are driving dispersion: REVG beat estimates; XOM saw upgrades; WBD is bid on deal chatter; UBER is lower.
• Policy remains the fulcrum: Reuters flags a high-probability 25 bp cut, with the statement and Powell’s tone likely to determine whether the afternoon skews toward a relief rally or renewed factor rotation.