Market risk sentiment showed slight improvement, with European stocks edging higher. U.S. index futures pointed to a second consecutive day of modest gains, while Bitcoin's sharp rebound also helped restore some risk appetite among investors. The ADP report signaled deterioration in the U.S. labor market, with November employment figures unexpectedly declining.
As of writing, Dow futures rose 0.23%, S&P 500 futures gained 0.20%, and Nasdaq futures climbed 0.18%.
European markets traded slightly higher, with the pan-European STOXX 600 index up 0.4% at 577.82 points. Major regional indices broadly advanced, with German and French benchmarks rising 0.4% and 0.3%, respectively.
Improved global investor sentiment and positive corporate news, led by tech and industrial stocks, helped offset declines in heavyweight financial shares. Technology stocks remained the index's biggest driver, poised to extend gains for a fourth straight session following Wall Street's overnight rebound.
Kiran Ganesh, Multi-Asset Strategist at UBS Global Wealth Management, noted: "We've begun seeing significant divergence within the tech sector... We remain positive on tech stocks through 2026, but this will increasingly become a stock-picker's market rather than the broad rally seen year-to-date."
S&P 500 futures rose 0.2% as dovish Fed commentary and expectations for a new chair favoring accommodative policy fueled bets on faster-than-expected rate cuts, helping U.S. stocks recover from November's slump.
ADP's employment report showed an unexpected decline in private payrolls during November, with downwardly revised October figures at +47K jobs versus November's -32K drop. The Labor Department's closely watched November jobs report, delayed to December 16 due to the government shutdown, will include October nonfarm payrolls.
Despite ADP's weak data, initial jobless claims remained consistent with the "no-hire no-fire" narrative. Economists attributed labor market stagnation to economic uncertainty from tariff policies, with September job growth at just 119K and unemployment rising to a four-year high of 4.4%.
Fed Rate Cut Bets Intensify The dollar fell for a ninth consecutive session, with the DXY index down 0.15% at 99.10, on track for nearly 9% annual decline. Weak U.S. data and growing expectations for Fed dovishness prompted traders to increase rate cut bets.
Fed Governor Christopher Waller recently stated labor market weakness justified another 25bps December cut, while White House economist Kevin Hassett emerged as a top candidate for next Fed chair. President Trump indicated he would announce his nominee by early 2026.
Kristina Hooper, Chief Market Strategist at Man Group, cautioned: "An early announcement could create a 'shadow Fed chair' dynamic given Chair Powell's term runs through May, potentially complicating policy communication during a period requiring clarity."
CME's FedWatch Tool showed an 87% probability for December rate cuts as of Wednesday, up from 30% on November 19. With December easing nearly fully priced, focus shifted to subsequent moves, with markets anticipating 88bps cumulative cuts by December 2026.
Bitcoin Rebounds to Two-Week High Bitcoin surged past $93,000, hitting a two-week peak and reversing Monday's drop below $84,000, helping restore risk appetite. The broader crypto market attempted to sustain its rebound after weeks of selling pressure, with Solana, Cardano, and XRP posting double-digit gains while Ethereum rose 9% to reclaim $3,000.
After hitting an all-time high of $126,251 in October, Bitcoin suffered steep declines, including a December plunge following its worst November since May 2021's crypto crash, which saw record outflows and over $18,000 in losses.
JPMorgan Warns: Overheated Rate Cut Expectations May Lift 2026 Treasury Yields JPMorgan strategists cautioned that Treasuries were unlikely to repeat 2025's strong performance given overly aggressive Fed easing expectations. The bank forecasts 10-year yields, having fallen ~50bps to ~4.08% in 2025, will climb to 4.35% by end-2026 - among the more bearish outlooks. A median survey projected 4.06% year-end 2026 yields.
While rate swaps price nearly four 25bps cuts over the next year starting December 10, JPMorgan's more optimistic U.S. economic view anticipates just two cuts - next week and January 2026.
Key Stocks: Crypto-linked stocks gained premarket: Coinbase +2.4%, Bitfarms +3.9%, Strategy +2.1% Quantum computing plays rose: QBTS briefly up nearly 7%, Rigetti Computing and Quantum Computing both +1%+ Marvell Technology surged nearly 10% premarket on earnings beat and price target hikes GitLab dropped 10.6% as analysts called its Q4 guidance "conservative" SiTime extended gains 1% amid reports of Renesas timing unit acquisition talks Microchip Technology rose over 3% after raising Q3 sales and EPS guidance Asana jumped over 5% on better-than-expected FY26 Q3 results Arcadia Healthcare plunged over 22% after cutting 2025 guidance WeRide gained nearly 4% as ARK Invest initiated a 660K+ share position XPeng continued sliding 1.6% after yesterday's 7.92% drop to 3-month lows
