Fed Cut Rate Stocks Rotate Beyond Big Tech

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Main Content:

1.    Major indexes weekly performance 

2.    U.S stocks weekly wrap 

3.    S&P 500 sector index weekly/month performance 

4.    China/Hong Kong stocks weekly wrap 

5.    Singapore stocks weekly wrap 

6.    Major indexes weekly chart and technical support & resistance levels

U.S.

For the week of Dec 12, major U.S. equities finished mixed but largely resilient, as investors digested the Federal Reserve’s third consecutive 25bp rate cut alongside messaging that was perceived as less hawkish than feared. Market leadership broadened, with small- and mid-cap stocks outperforming, while mega-cap technology paused amid valuation concerns.

The Russell 2000(RUT) led gains, rising 1.19%, followed by the Dow Jones Industrial Average (DJI), which added 1.05%. In contrast, the Nasdaq Composite (COMP) declined 1.62%, weighed down by weakness in large-cap tech after disappointing earnings updates from select AI-related names. The S&P 500 (SPX) ended the week lower after a sharp pullback on Friday erased earlier gains. Refer to the table below for the major indexes' weekly performance.

Key highlights for the week and next:

1.    Fed delivers third straight rate cut, signals flexibility. The Federal Reserve lowered the fed funds target range by 25bps to 3.50%–3.75%, as expected. While the statement language hinted at a potential pause in January, Chair Powell emphasized heightened sensitivity to labor market risks and reiterated confidence that inflation will continue to cool. Notably, the Fed also announced plans to purchase short-term Treasury bills to support money market liquidity. 

2.    Policy outlook supportive, not overtly dovish. Despite dissent among three policymakers, the majority supported the cut due to slowing hiring trends. Updated projections show most FOMC members still expect lower rates ahead, with scope for one to two cuts that could bring rates toward the 3.0%–3.5% neutral range. 

3.    Labor market signals soften. Initial jobless claims jumped to 236k, the highest since September, raising concerns over near-term labor market momentum. While job openings edged higher to a five-month high, layoffs increased and the quits rate fell to its lowest level since 2020—suggesting workers are becoming more cautious. 

4.    Rates market reflects late-cycle easing. Treasury yields diverged, with short-term yields falling after the Fed decision while longer-dated yields edged higher. The 10-year Treasury yield remains rangebound near 4.0%–4.5%, reflecting lingering inflation concerns and fiscal uncertainty. Investment-grade credit outperformed, while high-yield bonds saw pockets of volatility. 

5.    Rotation away from mega-cap tech. Technology stocks lagged amid renewed concerns over AI-related capital spending and stretched valuations, following earnings disappointments from Oracle and Broadcom. This drove a rotation toward small- and mid-cap equities, which tend to benefit more directly from falling interest rates and easing financial conditions. 

SPX sectors in play

Seven of the 11 S&P 500 sectors gained for the week, with interest-rate-sensitive and value-oriented segments such as Financials(XLB) and Materials(XLB) outperformed, while Technology-related( XLK) stocks lagged, reflecting a pause after strong year-to-date gains. The shift highlights improving breadth beneath the surface of the rally and supports the case for diversification as monetary policy becomes less restrictive. Refer to below SPX sectors ETF weekly performance table.

Indexes technical levels

Despite near-term volatility, the broader uptrend across U.S. equities remains intact. The Dow(DJI) and small-cap indexes pushed toward new highs, while the S&P 500(SPX) and Nasdaq(COMP) experienced healthy consolidation after extended runs. With policy easing nearing its later stages, markets appear to be transitioning from a liquidity-driven rally to a more earnings- and breadth-driven phase. Click below three indexes for their weekly charts.

DJI weekly chart

SPX weekly chart

Nasdaq weekly chart

China/HK

Mainland China stock markets retreated as investors took profits after recent months’ gains. The Shanghai Composite Index(SSE) fell 0.34% and the blue-chip CSI 300 shed 0.08%. In Hong Kong, the benchmark Hang Seng Index slid 0.42%.

Key highlights for the week and outlook for China/HK:

1.    November inflation data underscored the weight of deflationary pressures on China’s economy. The consumer price index (CPI) rose to 0.7% in November year on year, staying above zero for the second straight month. But the producer price index fell 2.2%, marking the 38th straight month of declines. The core CPI, which excludes food and energy, was unchanged at 1.2%, Bloomberg reported, citing official data. 

2.    Unlike the U.S. and Europe, China has been grappling with deflation since the pandemic ended amid a prolonged housing slump that has in turn discouraged consumption. In response, the government launched a so-called anti-involution campaign aimed at curbing price wars and excessive output in industries ranging from food delivery to car manufacturing. But the latest inflation report suggested that Beijing’s efforts in beating deflation have had limited progress. 

Refer to below Hang Seng Index stocks’ weekly performance table.

Click below for SSE and .HSI weekly chart.

SSE weekly chart

.HSI weekly chart

 

Singapore

The Straits Times Index (STI) gained 1.22% this week to close at 4,586.45, breaking out decisively to a new record high after four weeks of consolidation. Market sentiment remained constructive, supported by expectations of a more accommodative global rate environment following the U.S. Federal Reserve’s third consecutive rate cut. Trading activity was typically subdued amid the school holidays and year-end festive period.

As 2025 draws to a close, the STI has delivered a strong year-to-date gain of 21.09%, reflecting improved risk appetite, firmer liquidity conditions, and renewed interest in Singapore equities. Financials and yield-sensitive sectors remained relatively resilient, benefiting from expectations that global interest rates are approaching a more neutral level, while gains across the broader market were selective.Refer to below STI index stocks’ weekly performance.

Click below for STI weekly chart.

STI weekly chart

Source: Some contents and data excerpted from various public market reports. Please comment to claim copyright ownership of any material, and I will remove it if necessary.

Stocks Climb Higher Expecting Rate Cuts

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Main Content:

1.    Major indexes weekly performance 

2.    U.S stocks weekly wrap 

3.    S&P 500 sector index weekly/month performance 

4.    China/Hong Kong stocks weekly wrap 

5.    Singapore stocks weekly wrap 

6.    Major indexes weekly chart and technical support & resistance levels

U.S.

For the week of Dec 6, major U.S. equities finished higher, extending the previous week’s momentum amid growing expectations of a Fed rate cut at the upcoming FOMC meeting. The technology-heavy Nasdaq Composite (COMP) led the advance with a 0.91% weekly gain, while the S&P 500 Index (SPX) also edged higher, adding 0.31%.

As we move into the final weeks of 2025, markets have delivered double-digit gains across all major U.S. indexes. Year-to-date, the SPX is up roughly 17%, while the COMP has climbed about 22%. Refer to the table below for the major indexes' weekly performance.

Key highlights for the week and next:

1.    Fed likely to cut interest rates at its December meeting, which will be held on December 9-10. It’s expected it aiming to bring rates to a neutral level (3.0%–3.5%) amid contained inflation and a softer near-term economic outlook. 

2.    The ISM Manufacturing PMI fell to 48.2% in November, down from 48.7% in October, signaling a continued slowdown in manufacturing activity. In contrast, the services sector showed modest improvement, with the Services PMI edging up 0.2 percentage points to 52.6%—its highest level in nine months. 

3.    Private payrolls saw their largest decline since 2023, with ADP reporting a 32k drop in November, reversing October’s revised 47k gain. ADP noted the slowdown was broad-based, led by weakness among small businesses. Meanwhile, initial jobless claims unexpectedly fell to 191k, the lowest since September 2022. 

4.    September inflation was little changed, with the PCE index rising 0.3% month-over-month, in line with August, and core PCE up 0.2%, also matching the prior month. Both measures were 2.8% higher year-over-year. Meanwhile, the University of Michigan’s preliminary December Consumer Sentiment Index rose 2.3 points to 53.3, supported by improved personal finance expectations. One-year ahead inflation expectations eased to 4.1%, the lowest since January 2025. 

5.    A Santa Claus rally has occurred 73% of the time since 1980, with the last five trading days of the year plus the first two trading days of January delivering an average S&P 500 gain of 1.1%. More broadly, the market has enjoyed a strong run since April, with the S&P 500(SPX) up about 38% and only one 5% pullback in November. 

SPX sectors in play

Six of the 11 S&P 500 sectors gained for the week, with growth stocks leading the way. Technology related stocks drove the rally, supported by Technology(XLK), Consumer Discretionary (XLY) and Communication Services (XLC), while Utilities (XLU) lagged, reflecting a risk-on market sentiment. Refer to below SPX sectors ETF weekly performance table.

Indexes technical levels

The S&P 500 (SPX) notched its second consecutive weekly gain, closing at a new high. The Nasdaq Composite (COMP) and Dow Jones Industrial Average (DJI) also logged their second straight weekly advances, with uptrends remaining firmly intact across all three major indexes. Click below three indexes for their weekly charts.

DJI weekly chart

SPX weekly chart

Nasdaq weekly chart

China/HK

Mainland China stock markets advanced as enthusiasm for domestic technology and artificial intelligence trades eclipsed data pointing to an economic slowdown. The Shanghai Composite Index(SSE) added 0.37% and the blue-chip CSI 300 rose 1.28%. In Hong Kong, the benchmark Hang Seng Index gained 0.87%.

Key highlights for the week and outlook for China/HK:

1.    China’s manufacturing PMI contracted for the eighth straight month, though it inched up to 49.2 in November, while services activity softened as earlier holiday-driven support faded. 

2.    The latest PMI data reinforced signs of slowing momentum in China’s Q4 recovery. The prolonged property downturn—stemming from the 2020 “three red lines” policy tightening—remains a central risk, weighing on consumption and adding deflationary pressure. Even so, most analysts still expect China to achieve its ~5% annual growth target without additional policy stimulus this year. 

3.   High-tech production remained resilient, but persistent weakness tied to the property sector, alongside soft demand and continued U.S. trade pressures, underscores an uneven recovery across China’s economy. 

Refer to below Hang Seng Index stocks’ weekly performance table.

Click below for SSE and .HSI weekly chart.

SSE weekly chart

.HSI weekly chart

 

Singapore

The Straits Times Index (STI) edged up 0.16% this week to close at 4,531.36, continuing to consolidate within its four-week trading range near record levels. As 2025 draws to a close, the STI has delivered a strong ~20% year-to-date gain. As highlighted last week, JPMorgan recently raised its 12-month STI target to 6,000 from 5,000, citing improving market liquidity, a pickup in IPO activity, and ongoing wealth management growth. Refer to below STI index stocks’ weekly performance.

Click below for STI weekly chart.

STI weekly chart

Source: Some contents and data excerpted from various public market reports. Please comment to claim copyright ownership of any material, and I will remove it if necessary.