Markets hit the pause button as it waits for today's eco data

The final full week of trading kicked off with a whimper, not a bang, as stocks drifted lower across most of the board.

At the close, the Dow slipped 42 points, the S&P fell 10, and the Nasdaq led the decline, down 140 points. The weakness was broad: the Russell lost 20, Transports dropped 30, and the Equal Weight S&P fell by 51 points — a clear reminder that participation continues to narrow.

The lone bright spot? The Mag 7, which managed to gain 43 points, and even that strength came from just three names: Tesla +3.5%, Meta +0.5%, and Nvidia +0.7%.

Outside of that trio, tech weakness was everywhere — semiconductors, quantum, disruptive tech, cybersecurity, robotics, and infrastructure software all traded lower. This wasn’t rotation; it was caution. That caution is being conveniently pinned on today’s economic data — convenient because the market has been searching for an excuse to pause after a strong run.

The focus this morning is squarely on the Non-Farm Payrolls report at 8:30am. Expectations call for +50,000 new jobs, a notable contrast to the latest ADP report, which showed a loss of 32,000 jobs.

Average Hourly Earnings are expected to rise 0.3% month-over-month and 3.6% year-over-year, consistent with the last full NFP report from September 5th.

Unemployment is forecast to tick up to 4.5% from 4.4% — a move worth noting, but hardly a number that signals panic.

We’ll also see Advanced Retail Sales, expected at +0.1%, with sales ex-autos and gas up +0.4%.

And rounding out the data slate are the PMI numbers: Manufacturing PMI at 52.1 — still expansionary. Services PMI at 54 — even more so!

Bottom line: this looks far more like a market waiting for confirmation than one preparing for trouble. The data will either validate the pause — or give stocks permission to re-engage. We’ll find out what that means in a couple of hours.

And now the ‘problem children’ think AVGO, ORCL, and CRWV — all names squarely in the AI “infrastructure” space. Think of these as the picks and shovels that make AI possible — the compute, connectivity, storage, and software backbone that powers AI training and deployment at scale.

All three continue to feel the pressure from investors, traders, and algos who remain skeptical about whether the eventual returns will justify the massive level of spending taking place today. In other words, the market isn’t questioning ‘the promise’ of AI — it’s questioning the ‘timeline and payoff’. For now, that skepticism is keeping these names under pressure, even as long-term demand for AI infrastructure continues to build in the background.

To be clear – AVGO is down 18% off its recent high, ORCL is down 46% off of its September high while CRWV is down 61% off its June high. But it’s not all negative – AVGO is still up 46% ytd, ORCL 10% ytd and CRWV up 85% ytd.

Bonds were largely unchanged, with TLT up 0.1% and TLH higher by 0.2% — hardly enough movement to write home about. The 10-year Treasury is yielding 4.17%, while the 30-year sits at 4.84%. And let me remind you — what happens next – matters. The lines in the sand remain 4.50% on the 10-year and 5.00% on the 30-year. If yields begin to tease higher and kiss these levels you should expect equities to respond with a pullback. How deep that pullback becomes will be directly tied to how far yields push — a modest move likely results in churn, while a decisive break higher would bring more meaningful pressure to risk assets.

Speaking of risk assets – Have you seen crypto? Bitcoin and Ethereum continue to struggle. This morning – Bitcoin is trading at $86,300 – down a whopping 33% off its high and just $6k away from it’s November low of $80,000. Ethereum is trading at $2,925 – down 42% off its’ August high.…and just $300 away from its November low. And the newest ‘kid’ on the block making headlines is Solana and it is down 50% off of its September high and is trading at levels last seen during the November meltdown. All three below the trendlines leaving them struggling to find support.

Oil — well here we are. Crude is trading at $55.85, a level I’ve been keying on for months now. We’ve officially slipped below the October low of $56 and are now preparing to test the April low at $54.75.

And this is the same story we’ve been telling all along. This move lower being driven by a supply glut — one that’s expected to remain in place well into the new year. That’s not a surprise. But remember - this is not a demand problem. Demand is fine. The issue is simply too much supply – which by the way is not necessarily a bad thing (think the cost of manufacturing, the cost of transportation and the cost of filling up your tank with gas) – it’s all coming DOWN! Not sure about you, but I’m paying $2.79/gal for gas and that represents a 15% decline in the price of gasoline for me.

I suspect crude will churn and test that $54.75 level in the days ahead. Remember — we’ve discussed this before — the world is awash in oil, and the U.S. has once again become the swing producer. (DBD!).

Gold is trading at $4300 this morning – down from its recent high of $4390 but still above that breakout triangle that we discussed last week. This morning – it is churning as it awaits the latest Eco data – specifically the NFP report. As if this report is going to change the rate cut narrative – I’m in the camp that it won’t and I am also in the camp that we are done with seeing any rate cuts until AFTER JJ’s term ends. And btw – I’m remain convinced that we should NOT be cutting rates any longer UNLESS the eco data circles the drain – something it is not doing.

This morning futures are lower….. Dow futures are -110, S&P -22, Nasdaq -125, while the Russell is -10. AVGO, ORCL and CRWV all lower again this morning and that is dragging the ‘anything tech’ trade lower as well. Remember – we are now in the final chapter of the 2025 story…. volumes are in decline which only means moves can be exaggerated. The algo’s only amplifying that exaggeration.

This is not the time to make emotional decisions…. stick to the plan – Capisce?

European markets are churning lower…they are due to get an announcement from both the ECB and the BoE tomorrow and while no changes are expected – it ain’t over til it’s over.

The S&P closed at 6,816 – down 10 pts. And while we tried to kiss and penetrate the October high at 6,920 last week – that was not going to be the story. Trendline support is at 6763 down 53 pts or less than 1% from here – a level we might test today…and if it fails to hold up then look for the algo’s to go into sell mode as that suggests a ‘technical break’ that could take us lower to test intermediate support at 6630. If we hold then expect a bit more churn and then a push higher into the end of the year. Remember – if we pierce 6920 – the October highs – then we could see the algo’s take us to 7000 in the blink of an eye – just because.

Italian beef and potato soup

This is a great winter dish – always have some in the fridge from December to March.

For this you need: 1 lb. of ground chuck, the ‘Trinity’ - carrots, celery and onions (all diced), 1 garlic clove, 1 lg potato – peeled and cut into bite size pieces, 1 bag of frozen peas, s&p, 1 can of tomato passata (not puree), 1 parmegiana cheese rind, 1/2 box of Ditalini (small pasta) and broth – some use chicken broth others use vegetable broth – either way it’s your call.

Begin by sautéing the Trinity with sliced garlic in some olive oil. – After 10 mins – add in the ground chuck and brown. Season with s&p. Now add in the tomato passata – stir to mix. Toss in the potatoes and cheese rind – and then add in the broth – enough to cover the meat. Bring to a boil, then cover and turn the heat to med – let it cook for 10 mins.

Now add in the pasta and the peas – and cook for another 8 mins….

Now – the pasta may suck up all the broth – if so, just add more – you want this to be ‘slightly soupy’.

When done – serve in warmed bowls and make sure you have plenty of fresh grated Parmegiana cheese for the table.