Morning markets: Energy leads, tech soft; Fed minutes ahead

Introduction#

U.S. equities head into Tuesday, December 30, 2025 on the back foot after a broad but orderly pullback Monday, led by weakness across large-cap technology and banks, and counterbalanced by renewed leadership in energy and pockets of defensives. According to Monexa AI, the S&P 500 (^SPX) closed at 6,905.74 (−24.20, −0.35%), the Dow (^DJI) at 48,461.93 (−249.05, −0.51%), and the Nasdaq Composite (^IXIC) at 23,474.35 (−118.75, −0.50%). Volatility ticked modestly higher, with the VIX (^VIX) finishing at 14.60 (+2.82%), and the CBOE Russell 2000 Volatility Index (^RVX) at 19.18 (+3.56%), as investors trimmed risk into year-end.

Overnight, the U.S. dollar traded steady ahead of the upcoming Federal Reserve meeting minutes, a release that could shape early-2026 rate expectations, while rising Japanese government bond yields kept Asia cautious, according to Monexa AI’s curated headline summary. Media also highlighted further year-end pressure in tech and neutral risk appetite readings from CNN’s Fear & Greed index. Macro-sensitive headlines included former President Trump’s renewed criticism of Fed Chair Jerome Powell and references to earlier-2025 tariff shocks; yet, volatility remains notably below spring highs as markets settle into a late-year equilibrium.

Market Overview#

Yesterday’s Close Recap#

According to Monexa AI, here is how the major U.S. benchmarks settled on Monday:

The S&P 500 closed less than 1% below its year-to-date high of 6,945.77, remaining above its 50-day average of 6,790.16 and its 200-day of 6,267.39 (Monexa AI). Turnover was seasonally light: S&P 500 volumes finished well below average (1.98B vs. 5.25B), consistent with year-end positioning. The Dow and Nasdaq posted similar fractional declines, while the NYSE Composite (^NYA) slipped −0.36%. The slight pop in volatility indexes suggests protective hedging, particularly across small caps, where ^RVX rose more than ^VIX.

Under the surface, the tape showed rotation rather than panic. Monexa AI’s heatmap flagged technology as the largest drag, with NVDA (−1.21%) and PLTR (−2.40%) under pressure, while MU surged +3.36% and ANET rose +1.75%. Financials leaned lower as major banks slipped (C −1.90%, JPM −1.27%, BAC −1.46%), but diversified exposures and exchanges outperformed (BRK-B +0.55%, CME +0.61%). Energy rallied as oil-linked equities gained (XOM +1.19%, COP +1.20%, OXY +1.41%), while commodity miners sold off (NEM −5.64%, FCX −2.93%, ALB −3.62%), underscoring a split within resource-linked trades.

Overnight Developments#

According to Monexa AI’s news roundup, U.S. futures steadied in Asian hours as rate-cut hopes offset hawkish signals out of Japan, where rising JGB yields tempered regional equity risk-taking. The U.S. dollar traded steady into the Fed minutes, and coverage framed Monday’s weakness as year-end selling focused on tech leaders. Media also flagged new regulatory scrutiny and tighter rules facing small-cap IPOs heading into 2026, while sentiment gauged by CNN’s Fear & Greed index slipped but stayed in neutral territory. On the corporate front, multiple outlets highlighted a late-year burst of AI-focused dealmaking, including Meta’s acquisition of Manus to bolster AI agents and NVIDIA’s non-exclusive licensing agreement with Groq.

For deeper context on the NVIDIA–Groq development, both Reuters and Groq’s own newsroom confirmed a non-exclusive license of inference technology and an effective acqui-hire of key personnel into NVIDIA, with GroqCloud to continue independently under its CEO. Sell-side coverage reiterated constructive ratings on NVDA, including Wells Fargo’s Overweight and BofA’s Buy, per Monexa AI.

Macro Analysis#

Economic Indicators to Watch#

With premarket data sparse, the focal catalyst is the Federal Reserve meeting minutes, expected to color how policymakers weighed disinflation progress, labor-market resilience, and the path for potential 2026 rate adjustments. According to Monexa AI’s curated headlines, the dollar’s steady tone into the release signals measured positioning rather than a directional macro bet, consistent with subdued volatility levels. In the absence of other major data today, the minutes loom large for duration-sensitive sectors—financials, real estate, and high-multiple tech—by potentially nudging terminal-rate and cuts timing expectations.

A secondary macro thread is the liquidity profile into the final trading days of the year. Light volumes on Monday across the S&P 500 and Nasdaq fit the seasonal pattern and can exaggerate intraday swings in leadership without fundamentally altering trend structure. Investors should be mindful that post-close headlines can propagate larger-than-usual opening gaps, particularly in names with idiosyncratic news flow.

Global/Geopolitical Factors#

Overnight narratives continued to reference 2025’s earlier tariff shocks and the subsequent normalization of volatility, as well as signs of rising JGB yields that kept Asia cautious, per Monexa AI. While not an immediate U.S. market driver today, higher Japanese yields can ripple through global asset allocation by narrowing rate differentials, influencing currency hedging decisions, and tempering carry trades allied with global risk appetite. Political commentary—such as proposals to replace Fed leadership—adds headline noise but does not alter the institutional cadence of policy setting; nonetheless, it can contribute to short-term sentiment swings.

Separately, ongoing IPO-market guardrails—with regulators and exchanges scrutinizing small-cap listings more closely—could continue to concentrate capital in seasoned issuers and liquid mega-caps. According to Monexa AI’s headline summary, tighter standards and investor caution around smaller offerings may keep the cost of capital elevated for early-stage companies into 2026.

Sector Analysis#

Sector Performance Table#

According to Monexa AI, sector performance at Monday’s close was as follows:

Note: Monexa AI’s sector table reflects aggregated close-to-close changes across sector baskets. There are discrepancies versus the constituent heatmap: for example, the heatmap flagged energy as the strongest group with roughly +0.95%, utilities as modestly positive, and real estate as positive, while the sector table shows Energy +0.40%, Utilities −0.36%, and Real Estate −0.08%. This divergence likely stems from differences in classification, weighting, and timing windows across the two datasets. We prioritize the sector table for point-in-time close data, and we use the heatmap to describe intra-sector dispersion and leadership dynamics across individual stocks.

In practical terms, leadership skewed toward cash-flow and commodity-linked energy, with broad-based gains in integrateds and E&Ps, while banks and select rate-sensitive groups lagged, consistent with light risk trimming and a mild backup in volatility. The consumer complex remained bifurcated: higher-quality discretionary names showed selective strength, but the sector was dragged by heavyweight TSLA (−3.27%). The staples sub-complex leaned defensive with WMT (+0.71%), KO (+0.41%), and PEP (+0.32%) firming, even as HSY (−1.86%) and TGT (−1.46%) lagged.

Company-Specific Insights#

Earnings and Key Movers#

The most consequential late-2025 corporate theme remains the evolution of the AI trade, with NVIDIA’s licensing agreement with Groq reshaping expectations for the inference stack heading into 2026. Reuters and Groq’s newsroom confirm a non-exclusive license, with Groq’s founder and other leaders set to join NVIDIA. Sell-side commentary tracked by Monexa AI shows Wells Fargo reiterating Overweight and BofA maintaining Buy on NVDA, underscoring conviction that inference will be a major growth vector. NVIDIA closed −1.21% on Monday to 188.22, in line with broader tech softness and profit-taking into year-end after a strong 2025.

Monexa AI also highlights a sharp rally in MU (+3.36%) and outperformance in ANET (+1.75%), consistent with selective strength in memory and networking. Conversely, PLTR (−2.40%) and many mid-cap software names lagged, reflecting a cautious posture toward higher-multiple AI-adjacent equities following November’s peaks. DDOG ended −0.27% after MoffettNathanson reiterated Buy, arguing the post-peak pullback created an attractive entry, per Monexa AI.

In consumer tech and internet, META finished −0.69% even as multiple outlets reported the company’s acquisition of Manus to bolster AI agent capabilities. The move extends a late-year trend of mega-cap AI dealmaking and points to a 2026 playbook focused on agentic workflows and monetization beyond the metaverse. GOOG was roughly flat (−0.18%), AAPL was marginally higher (+0.13%), and AMZN edged lower (−0.19%), signaling a neutral stance in ad/platform heavyweights. TMUS gained +1.07% and CMCSA rose +0.71%, while NFLX slipped −0.34%.

In autos and discretionary retail, the sector’s negative skew was driven by TSLA (−3.27%). Select retail names outperformed, including EBAY (+2.97%) and LULU (+1.71%). In staples, WMT and beverages outperformed, pointing to a mild defensive tilt. Restaurants and big-box laggards such as MCD (−0.69%) and TGT (−1.46%) underscore dispersion within consumer spending proxies.

Healthcare showed mixed action. Managed care softened with UNH (−0.87%), while ABBV (+0.37%) and diagnostics/tools bellwether TMO (+0.75%) outperformed. Monexa AI notes that Bernstein reaffirmed Outperform on GILD amid contained Medicaid pricing risk, helping reduce a key overhang into 2026. In biotech, AGIO slipped −3.07% after a prior rally tied to its FDA approval, with BofA having modestly raised its target per Monexa AI; the stock remains sensitive to launch execution and REMS dynamics.

Industrials underperformed led by airlines—UAL (−2.27%) and DAL (−1.87%)—and logistics UPS (−0.86%). Defense moved higher with LMT (+1.21%), and diversified heavy equipment CAT eased (−0.75%). In energy, the advance was broad across integrateds and E&Ps: XOM (+1.19%), COP (+1.20%), FANG (+1.54%), and OXY (+1.41%). Royalty/land name TPL rallied +2.43%.

Materials told a different story: precious and base metal miners were hit, with NEM (−5.64%), FCX (−2.93%), and ALB (−3.62%). This came despite a year when metals, including gold, silver, and copper, posted standout performance, according to Monexa AI’s industry wrap-up. The gap between commodity prices and equity performance can reflect short-term positioning, company-specific factors, or forward-looking cost and capex concerns; it also reminds investors that commodity equities may not track spot prices in lockstep.

Financials weakened across major banks and card-linked exposures, while BRK-B and CME outperformed. Monexa AI cites BMO’s steady read-through for HAL into Q4 and 2026, aligning with the broader energy tone. Elsewhere, KBH (−0.65%) was downgraded to Market Perform on strategy concerns as it pivots back to build-to-order in a market where competitors lean on buy-downs, according to Monexa AI. LW (−0.74%) saw a price-target cut tied to implied H2 FY26 EBITDA compression.

Extended Analysis: Global Overnight Shifts And The AI Inference Pivot#

Two forces frame the tape into today’s open: a measured global macro drift and a structural shift inside AI that is dictating stock-level dispersion. On the macro side, steadier dollar conditions into the Fed minutes and caution in Asia due to higher JGB yields argue for a muted risk backdrop rather than a durable trend reversal. With the S&P 500 still within a hair of its year high and above its medium- and long-term moving averages, the burden of proof for a deeper drawdown remains elevated; low realized volatility keeps systematic selling in check, even as hedging nudges ^VIX and ^RVX higher.

Within AI, the market is clearly recalibrating away from a one-factor “training-compute only” trade toward a more nuanced view that differentiates between training and inference economics, latency requirements, and software integration. That is the context for NVIDIA’s non-exclusive license of Groq’s inference technology—confirmed by Reuters and Groq’s newsroom—which brings on-chip memory and deterministic, low-latency design choices into NVIDIA’s already-dominant platform. NVIDIA’s own disclosures point to a still-robust revenue and margin profile into FY2026, with guidance around $65 billion for Q4 FY2026 and gross margins in the mid-70s per its latest earnings release (NVIDIA IR.

For investors, the implication is a wider hardware and software moat that could preserve share in both training and inference, while catalyzing broader AI factory builds in 2026. Bloomberg has chronicled management’s “no AI bubble” stance, and separate reporting from Reuters has highlighted hyperscaler capex flows into NVIDIA-based capacity. Against that, the equity tape is more discerning: mid-cap and high-multiple AI beneficiaries have cooled since November highs, as seen in DDOG and PLTR, while cash-generative infrastructure names in networking and memory—ANET and MU—are being rewarded for clearer demand visibility and improving supply/pricing cycles.

The second axis of rotation is the resurgence in energy equities. Here, the divergence between sector tables and constituent-level advances suggests that investors are selectively accumulating balance-sheet-strong, return-of-capital leaders rather than indiscriminately buying the full sector basket. Gains in XOM, COP, FANG, and OXY align with a preference for cash yield and free cash flow in a market reassessing the pace of rate cuts. The simultaneous selloff in miners like NEM and FCX is a reminder that commodity beta can be path-dependent; equity investors are embedding forward cost curves, operational risk, and litigation headline risk (Monexa AI also flagged class-action developments related to FCX), not just today’s spot prices.

Finally, the consumer barbell remains intact. The sector’s heavyweights are split between high-beta discretionary and steady-eddy staples. Monday’s price action—TSLA down sharply, WMT and beverages higher—fits a market that is not abandoning risk but is happy to upgrade quality into year-end. That construct pairs with a neutral-feeling Fear & Greed signal and a VIX in the mid-teens: risk is being repriced, not rejected.

Conclusion#

Morning Recap and Outlook#

Heading into today’s open, the set-up is straightforward. First, the Fed minutes matter at the margin: a dovish tilt could re-energize longs in rate-sensitive groups, while a hawkish tone might extend the quiet rotation into cash-flow leaders and defensives. Second, sector leadership is likely to remain two-speed—energy and selected defensives bid, mega-cap tech mixed, mid-cap growth choppy—until new macro data or guidance recalibrates the growth-versus-duration tradeoff. Third, AI differentiation is the story within technology: infrastructure names tied to inference efficiency and networking have the clearer runway; software beneficiaries may need fresh catalysts or valuation resets.

For positioning, investors should keep an eye on the following into the bell and through the session. Watch index breadth and volatility term structure as indicators of whether Monday’s rotation extends or fades. Monitor NVDA for read-throughs from the Groq integration narrative, MU and ANET for confirmation of hardware demand, and TSLA as a swing factor inside consumer discretionary. In financials, track large banks versus exchanges such as CME for confirmation of the “defensive within financials” tilt. In energy, watch broad integrateds and royalty names—XOM, COP, OXY, TPL—to gauge whether capital continues favoring cash-flow compounders.

Investors should also remain mindful of data limitations and divergences noted above. Sector tables and constituent-level heatmaps do not always reconcile perfectly due to methodology and timing. In today’s market, micro beats macro intraday: stock picking and factor awareness will likely add more value than sweeping sector bets as we close the books on 2025 and await the early-2026 macro cadence.

Key Takeaways#

The U.S. market closed modestly lower Monday, with the S&P 500 at 6,905.74 (−0.35%), Nasdaq at 23,474.35 (−0.50%), and Dow at 48,461.93 (−0.51%), per Monexa AI. The VIX at 14.60 (+2.82%) and RVX at 19.18 (+3.56%) imply incrementally more hedging but no stress.

Leadership rotated toward energy and selective defensives, while technology and financials drifted lower. Within tech, the market is differentiating more sharply between infrastructure winners (MU, ANET) and high-multiple software/AI platforms (PLTR, DDOG) that may require catalysts.

The NVIDIA–Groq agreement, corroborated by Reuters and Groq’s newsroom, is a notable step in the inference efficiency race and supports the view that AI capex remains robust into 2026, consistent with NVIDIA’s recent guidance (NVIDIA IR.

Macro-wise, the Fed minutes are the key swing factor for today’s tone. A steady dollar into the release and low realized volatility suggest a contained reaction unless the minutes materially shift the policy narrative. Liquidity remains thin, which can amplify moves.

Across resources, energy outperformed while miners underperformed, highlighting that commodity equities are reacting to forward curves, company-specific risk, and positioning—not just spot prices. Within consumer, high-quality staples outperformed even as discretionary was dragged by TSLA.

Bottom line: This is a rotation, not a risk-off. Keep the focus on quality balance sheets, cash returns, and clear demand visibility while staying nimble around policy headlines. The leaders to watch into the open: NVDA, MU, ANET, XOM, COP, OXY, and macro proxies CME and TSLA.