Before the Bell: AI headlines, Fed minutes and commodities

Introduction#

The final Monday of 2025 opens against a quietly constructive backdrop: major U.S. equity benchmarks ended the prior session little changed, breadth rotated toward materials and selected defensives, and volatility firmed into year-end. According to Monexa AI, the S&P 500 (^SPX) slipped to a 6,929.94 close (−0.03%), the Dow (^DJI) eased to 48,710.97 (−0.04%), and the Nasdaq Composite (^IXIC) finished at 23,593.10 (−0.09%), even as the S&P 500 printed a fresh intraday high at 6,945.77 before fading. The CBOE Volatility Index (^VIX) rose to 14.77 (:+8.60%:), a meaningful uptick from ultra-low levels but still historically subdued. Sector leadership skewed toward basic materials and real estate while energy and financials lagged, a rotation corroborated by Monexa AI’s heatmap of notable movers.

Overnight, liquidity remained thin with U.S. futures muted and Treasury yields edging lower into the holiday week, as tracked by Monexa AI’s news desk. The data calendar is light but consequential: markets will parse the Federal Reserve’s December meeting minutes later this week, alongside home price, construction spending, and manufacturing reads that will set the tone for early January. In AI, a late-December licensing agreement between NVDA and Groq continues to reverberate across the semiconductor complex; Reuters reported a non-exclusive licensing pact aimed at accelerating inference, with Groq remaining independent. Precious metals were choppy with silver swinging sharply, while the U.S. dollar traded steady in quiet conditions, according to Monexa AI.

Market Overview#

Yesterday’s Close Recap#

According to Monexa AI, large-cap technology’s net effect was neutral-to-slightly supportive as NVDA ticked higher while AAPL and MSFT slipped modestly. The S&P 500 notched a new intraday high before settling lower, a classic year-end pattern of profit-taking around strength. Volatility lifted, with the VIX up +8.60% to 14.77 and the Russell 2000 volatility gauge (^RVX) up +2.15% to 18.52, signaling a touch more hedging demand into the last week of the year.

Beneath the surface, Monexa AI’s heatmap shows dispersion: in technology, data/AI-adjacent names were volatile—PLTR fell while software/entertainment like TTWO firmed. Communication services was mixed with platform giants GOOGL/GOOG and META slightly softer, partially offset by strength in TMUS and NFLX. Consumer discretionary saw pronounced weakness in travel/cruise and TSLA, even as DECK and NKE advanced. Health insurers UNH and ELV gained, offsetting biotech losses led by MRNA.

Overnight Developments#

Monexa AI’s aggregated feed indicated that U.S. stock futures were muted Sunday night into Monday’s open, with investors set to navigate a holiday-thinned week. Treasury yields edged lower in quiet trading and the dollar traded steady as participants looked ahead to the Fed’s December minutes. European bourses were expected to start the week flat, matching the cautious tone seen stateside. Metals were volatile—silver surged and then slumped—while energy sentiment remained heavy after a soft session for producers and refiners.

AI headlines stayed in focus following NVDA’s non-exclusive licensing pact with Groq to bolster inference capabilities; Reuters and Groq’s own newsroom statement note Groq remains independent and GroqCloud continues operating. Separately, Bank of America’s CEO warned that markets could sour if the White House attempts to direct Federal Reserve policy—comments highlighted in Monexa AI’s overnight brief referencing a CBS interview—adding another layer to a debate over central bank independence that has been simmering into year-end.

Macro Analysis#

Economic Indicators to Watch#

The week’s marquee release is the Federal Reserve’s December meeting minutes. While minutes are backward-looking, they often sharpen the market’s sense of the Committee’s reaction function—how officials balanced still-sticky services inflation, robust labor markets, and a desire to preserve disinflation gains. With the VIX rising to 14.77 and front-end yields easing in thin trade, the risk setup into the minutes skews toward policy nuance creeping back into prices. According to Monexa AI’s calendar roundup, investors will also parse home price data, construction spending, and a manufacturing read. Together these should inform the early-January growth narrative and rate-sensitivity across housing, industrials, and small caps.

Into 2026, tax policy remains a swing factor. Monexa AI’s news flow highlights looming U.S. tax changes next year that could alter after-tax income and corporate decision-making. The market has been attempting to handicap the combination of fiscal contours with a less predictable Fed communication regime—quietly raising the premium on stock selection and balance-sheet quality rather than broad factor bets.

Global/Geopolitical Factors#

Europe begins the final trading week of 2025 on a flat footing, per Monexa AI, with local flows thin and eyes on the eurozone’s early-2026 data cadence. A structural change in Europe warrants attention: the Netherlands is set to begin a pension reform on January 1 that allows its nearly €2 trillion occupational system more latitude in risk assets, per Monexa AI’s recap of weekend coverage. While the timing and scale of reallocations are uncertain, this shift could marginally support equity and alternative asset demand over time.

In the Middle East, Monexa AI notes a reported increase in relocation requests by Israeli tech workers at multinationals amid ongoing conflict headlines—an under-the-radar factor for regional talent pools and operating footprints. Currency markets were largely range-bound overnight, with the dollar steady in quiet conditions. Commodities remain a swing variable; precious metals’ volatility is a reminder that hedging interest remains sensitive to rates, policy communication, and liquidity.

Sector Analysis#

Sector Performance Table#

According to Monexa AI, sector leadership bifurcated. Materials edged higher, aided by gains in metals and chemicals where names like FCX and NEM outperformed on Monexa AI’s heatmap. Communication services, despite mild weakness in platform bellwethers GOOGL/GOOG and META, benefited from strength in TMUS and NFLX. Real estate firmed on tower and data-center strength—AMT and EQIX—consistent with ongoing data consumption trends.

Energy lagged with broad softness across integrateds and refiners—XOM, CVX, MPC—as crude sentiment stayed heavy. Financials were mixed; diversified data/indices firms like SPGI and NDAQ outperformed while retail/crypto-exposed platforms HOOD and COIN traded lower. Healthcare saw a sharp divergence, with managed-care leaders UNH and ELV higher even as biotech weakness persisted in MRNA. Industrials were modestly softer as aerospace/defense names BA and NOC slipped while select manufacturers and tools names like MMM and SWK found support.

A note on data variance: Monexa AI’s sector performance table above shows Basic Materials up +0.19%, while its heatmap analysis highlighted stronger relative leadership (citing roughly +0.56%) driven by outsized moves in FCX, NEM, CRH, ALB, and DOW. This discrepancy likely reflects differences in time stamping, index composition, or weighting methodology across the two datasets. For portfolio positioning, we prioritize the official close prints from the sector table while acknowledging that individual materials bellwethers meaningfully outperformed.

Company-Specific Insights#

Earnings and Key Movers#

Semiconductors remain center stage. BofA Securities reaffirmed its Buy on NVDA, citing the company’s non-exclusive licensing agreement with Groq that broadens Nvidia’s reach into inference, a category that demands different performance-per-watt trade-offs than training. While media reports floated values “up to $20 billion,” Reuters reported that formal terms were not disclosed. The takeaway for investors is clear: Nvidia is moving to secure optionality across AI compute tiers, and the licensing structure may navigate regulatory sensitivities better than a full acquisition.

Storage and optical interconnects are second-order beneficiaries of AI capex. Monexa AI’s news and prior Reuters coverage indicate that hyperscalers have extended long-dated purchase orders for high-capacity drives, bolstering the setup for WDC and STX. Meanwhile, MRVL continues to lean into AI interconnects and optics—an area likely to see sustained demand as clusters scale.

In consumer discretionary, UBS reiterated Neutral on NKE despite improving brand signals, noting that operational and financial progress could take longer than the market expects. Elsewhere, travel and cruise stocks weakened while specialty retail names like DECK outperformed—evidence of dispersion tied to inventory, pricing power, and holiday execution.

Healthcare produced notable single-name moves. AGIO jumped after FDA approval of mitapivat (AQVESME), now the only therapy spanning both transfusion-dependent and non–transfusion-dependent alpha- and beta-thalassemia, as summarized by Monexa AI; the label includes REMS and a boxed warning but analysts do not expect material adoption headwinds. Conversely, BHVN remained under pressure after BHV-7000 failed to meet endpoints in major depressive disorder; attention shifts to the company’s seizure readout.

Energy and housing offered contrasting signals. BMO kept Market Perform on HAL while highlighting resilient North American activity, though 2026 forecasts embed a modest pullback in global upstream spending. Homebuilder KBH was downgraded to Market Perform at Raymond James as it pivots back to a build-to-order model just as peers lean on mortgage-rate buydowns—raising near-term competitive risks. For rate-sensitive pockets, the week’s Fed minutes and construction data loom large.

Finally, diversified financials outperformed high-beta fintechs. Data/indices providers SPGI and NDAQ gained, while retail brokerage and crypto proxies HOOD and COIN lagged. The pattern fits a late-year preference for fee-based, scale players over transaction-driven or speculative exposures.

Extended Analysis: Global Overnight Shifts And The AI Stack Beyond GPUs#

AI’s center of gravity is broadening beyond GPU-dominated training. Nvidia’s licensing pact with Groq underscores that inference—where latency, power efficiency, and total cost of ownership often trump raw throughput—will require architectures tailored to different workloads. The non-exclusive deal structure, reported by Reuters and outlined in Groq’s newsroom post, suggests Nvidia is choosing speed and flexibility over ownership, potentially accelerating time-to-market while keeping regulatory friction lower than an acquisition would invite. For investors, the key questions are how Nvidia integrates licensed IP into its software and networking stack and what this implies for gross margins and pricing across its inference portfolio.

Memory remains a binding constraint. Reuters and the Financial Times reported throughout 2025 that high-bandwidth memory (HBM) availability was tight, with Micron and SK Hynix capacity heavily booked for AI demand—conditions that raise input costs and influence server configurations for both training and inference. That scarcity tends to favor vendors that can optimize memory bandwidth per watt and per dollar, and it also channels incremental value toward interconnect providers that reduce communication bottlenecks.

Second-order beneficiaries are building durable narratives. Reuters highlighted that hyperscalers extended long-term orders for high-capacity storage, an encouraging backdrop for WDC and STX. On the network side, MRVL has pushed deeper into optics and scale-out fabrics to support rapidly growing AI clusters. As inference proliferates from core data centers to the edge, the demand for fast storage tiers and high-throughput, low-latency links should remain persistent, supporting multi-year investment cycles outside of pure compute.

Regulatory and competitive dynamics are the principal risks. As Reuters and the Financial Times have noted, large-scale licensing and executive-hiring arrangements can draw antitrust attention, and hyperscalers continue to develop in-house accelerators that could chip away at vendor share in certain workloads. The commercialization arc of specialized inference hardware also invites commoditization risk, which, if realized, would pressure margins. For now, the market is rewarding platforms with broad software ecosystems and tight integration across compute, networking, and memory—but the bar to sustain leadership is rising.

Outside AI, macro positioning remains cautious. Monexa AI’s overnight brief shows Treasury yields drifting lower and the dollar steady, reflecting a modest risk-on bias restrained by holiday liquidity and an event-heavy week. European markets are flat to start, and precious metals volatility reminds that hedging flows remain nimble. With U.S. equities on pace for a strong three-year run into 2025’s finish, the consensus heading into 2026 is a modest—but still positive—return profile, per Monexa AI’s survey of strategist commentary. That backdrop favors disciplined stock selection, focusing on quality balance sheets and secular demand capture while respecting pockets of event risk in biotech and crypto-tethered assets.

Conclusion#

Morning Recap and Outlook#

Heading into the open, the setup is defined by a handful of measurable dynamics. First, the major averages are hovering near all-time highs with volatility ticking up, a combination that argues for more selective risk-taking. Second, sector rotation is in motion: materials, real estate, and value-tilted defensives are firming, while energy and parts of financials remain soft. Third, AI remains the market’s organizing principle, but leadership within the stack is diversifying to storage and optics alongside compute. Finally, the policy calendar—Fed minutes plus housing and manufacturing data—will calibrate rate-sensitive groups into the first week of 2026.

For positioning, investors may want to emphasize quality large caps with durable cash flows and secular tailwinds, lean into select materials and infrastructure beneficiaries where fundamentals are improving, and remain tactical around high-beta and event-driven exposures. In semis, the NVDA–Groq licensing headlines keep attention on inference; investors should monitor how this interfaces with Nvidia’s software, networking, and pricing strategy. In healthcare, the split between managed care strength and biotech idiosyncrasy should persist into early 2026; here, stock selection and catalyst mapping are paramount. In consumer, the bifurcation between value-oriented retail and discretionary travel remains intact; execution and pricing power will be the differentiators.

Key Takeaways#

The prior session closed mixed with the S&P 500 slipping -0.03% to 6,929.94 and the Nasdaq down -0.09%, while the VIX rose +8.60% to 14.77—a reminder that hedging demand is creeping higher into year-end. Sector leadership rotated toward materials and real estate, with energy lagging; within sectors, dispersion remained elevated, rewarding single-name diligence. Overnight, futures were flat, Treasury yields drifted lower, and the dollar was steady, per Monexa AI’s desk. The Fed’s December minutes, housing data, and manufacturing prints are the week’s catalysts.

In AI, NVDA’s non-exclusive licensing deal with Groq, reported by Reuters, reinforces the push into inference architectures beyond GPUs. Tight HBM supply reported by top-tier outlets through 2025 favors vendors optimizing bandwidth and power, with knock-on demand for storage (WDC, STX and optics (MRVL. In healthcare, AGIO rallied on FDA approval while BHVN reset after a trial miss. In housing and energy, caution is warranted as competitive and macro headwinds persist.

Discrepancies between sector-level closes and heatmap leadership for materials likely reflect differing methodologies and timestamps; we anchor portfolio implications to the official close prints while acknowledging notable single-stock outperformance. The bottom line into the open: quality over beta, selective cyclicals over broad risk, and continued focus on how policy communication and AI capex allocation shape the tape.