U.S. markets pushed into record territory last week as investors parsed fresh employment and inflation data—both arriving just days before the Federal Reserve’s final policy decision of 2025.
The S&P 500 added 0.31%, the Nasdaq gained 0.91%, and the Dow advanced 0.50%, while the MSCI EAFE Index, which tracks developed international markets, finished higher by 0.72%.
Tech Leads the Way as Markets Digest Mixed Data
The week opened on a softer note, ending a multi-day win streak across the major indexes. That shift was short-lived. A rebound led primarily by mega-cap technology stocks renewed positive sentiment and carried momentum through midweek.
A notable spark came from ADP’s November private-payrolls report, which showed a decline in hiring. While weaker job growth may signal slowing economic activity, investors interpreted the report differently—viewing it as another data point that could influence the Fed toward a rate adjustment.
By week’s end, markets found their footing again. A delayed inflation report showing consumer prices rising at a slightly slower annual pace helped extend the S&P’s gains to a four-session streak. Meanwhile, the Russell 2000—an index representing small-cap stocks—broke to a fresh record high, signaling growing appetite for risk among investors.
Inflation Cools, But Job Growth Shows Signs of Strain
The Fed’s preferred inflation gauge, the Personal Consumption Expenditures (PCE) Price Index, rose 2.8% year-over-year, slightly below expectations. Core inflation—excluding food and energy—also landed at 2.8%, suggesting continued progress toward the Fed’s long-term target.
Employment data offered a different tone. Private-sector payrolls declined by an estimated 32,000 jobs in November. Small businesses appeared to bear the brunt—with payrolls falling by 120,000—while companies with 50+ employees added roughly 90,000 positions.
With inflation cooling and the labor market showing early signs of softening, speculation continues to build around whether the Fed might adjust policy at its December meeting.
What Investors Are Watching This Week
A notable stretch of economic updates and announcements could influence market direction:
- NFIB Small Business Optimism Index
- Job Openings Report
- Employment Cost Index
- Weekly jobless claims
- Federal Reserve rate announcement and press conference
— The final Fed decision of 2025 will be closely watched for language around future rate expectations.
Earnings season is lighter but includes notable household names in retail, technology, and consumer spending—AutoZone, Oracle, Adobe, Synopsys, Broadcom, and Costco are among those set to report.
Perspective
Markets enter the new week with cautious optimism. Cooling price pressures point toward progress in the Fed’s inflation fight, while employment data suggests tightening beneath the surface. Together, these indicators reinforce why the upcoming Fed meeting has become the focal point for markets, economists, and investors alike.