Market Pulse: Tuesday, December 16, 2025

Markets sold off broadly Tuesday after the delayed November employment report showed unemployment rising to 4.6%—a 4-year high. The advance-decline ratio collapsed to 0.36, with 368 stocks declining versus only 133 advancing. The divergence between narrow index gains (Nasdaq +0.23%) and broad participation tells the story of investors digesting weaker labor data ahead of Thursday’s crucial CPI inflation reading.

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Market Breadth: Broad Retreat

Metric	Today (Dec 16)	Monday (Dec 15)	Friday (Dec 12)
Advance/Decline Ratio	0.36	1.48	0.79
Advances	133	174	221
Declines	368	118	280
Advancing Volume	43.3%	35.1%	42.4%
Stocks Near 52-Week Highs	6	22	14
Stocks Near 52-Week Lows	0	1	4

What the Numbers Say

The A/D ratio of 0.36 is the weakest reading this month and signals widespread selling. With nearly three stocks declining for every one advancing (368 vs. 133), participation was decisively negative despite the Nasdaq eking out a small gain.

Here is the key divergence: advancing volume held at 43.3%, above Monday’s 35.1%. This indicates the stocks that did advance attracted meaningful volume. Tech mega-caps led the way, masking significant weakness under the surface.

Stocks near 52-week highs collapsed from 22 to just 6—a significant deterioration that suggests leadership is narrowing rapidly. However, stocks near 52-week lows remained at 0, which is quietly encouraging. Even on a bad breadth day, no names are breaking down to distress levels.

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Market Performance: Divergence Story

Index	Close	Change	% Change
S&P 500	6,800.26	-16.25	-0.24%
Dow Jones	48,114.26	-300.01	-0.62%
Nasdaq	23,111.46	+53.74	+0.23%
Russell 2000	2,519.30	-11.51	-0.45%

The Dow’s 0.62% decline led the way lower, dragged down by broad-based selling in industrials and healthcare. The S&P 500 fell 0.24%, while the Nasdaq managed a 0.23% gain on mega-cap tech strength.

Small caps (Russell 2000 -0.45%) underperformed, consistent with the risk-off positioning evident in breadth data. When small caps lag during a selloff, it typically indicates defensive positioning.

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VIX and Volatility: Remarkably Calm

Metric	Today (Dec 16)	Monday (Dec 15)	Friday (Dec 12)
VIX Level	16.51	16.50	15.74

Despite the worst breadth reading of the month, the VIX barely budged—essentially flat at 16.51. This is unusual and telling. Markets are selling off, but no one is panicking.

The lack of VIX spike suggests this is orderly de-risking, not distressed selling. The weak jobs data was concerning but not catastrophic, and markets are positioning cautiously ahead of Thursday’s CPI report rather than fleeing in panic.

Options markets remain calm across the board:

• SPY IV: 11.51% (low, -32% vs historical avg)
• QQQ IV: 16.38% (normal)
• IWM IV: 17.11% (below average, -28% vs avg)
• DIA IV: 10.56% (very low, -34% vs avg)

The subdued volatility across all major ETFs indicates this is cautious repositioning after the jobs data, not a fundamental shift in market sentiment.

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Headlines Moving Markets

Several catalysts drove Tuesday’s action:

Unemployment Hits 4-Year High: The delayed November employment report delivered concerning news with unemployment rising to 4.6%, the highest since late 2021. Job gains came in at just 64,000 versus expectations of 45,000, but the unemployment rate spike overshadowed the beat. This messy report suggests the labor market is cooling faster than previously thought.

Retail Sales Mixed: October retail sales (also delayed) came in flat versus expectations of +0.1%. Ex-autos showed strength at +0.4%, suggesting consumer spending remains uneven as we head into the holiday season.

CPI Thursday Looms Large: With Thursday’s November CPI release expected to show headline inflation at 3.1% and core at 3.0%, markets are recalibrating expectations. The combination of rising unemployment and sticky inflation creates a challenging backdrop.

Pfizer Revenue Cut: Pfizer (PFE) dropped 3.4% after lowering its revenue forecast, adding pressure to the healthcare sector.

Cannabis Rally Continues: Cannabis stocks surged after Trump indicated he is “very strongly” considering rescheduling marijuana. Curaleaf jumped 23%, Trulieve 12.5%, and Canopy Growth 10.2%.

The market is clearly wrestling with stagflation-lite concerns: weakening jobs combined with elevated inflation creates uncertainty about the Fed’s 2025 path.

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Sector Implied Volatility Snapshot

Sector ETF	IV Level	Status vs. Historical
XLK (Tech)	21.78%	Normal (-5% vs avg)
XLV (Healthcare)	16.41%	Normal (-9% vs avg)
XLF (Financials)	13.40%	Low (-24% vs avg)
XLI (Industrials)	12.91%	Low (-32% vs avg)
XLY (Consumer Disc)	17.91%	Normal (-10% vs avg)
XLE (Energy)	17.21%	Low (-25% vs avg)
XLB (Materials)	26.81%	High (+22% vs avg)
XLU (Utilities)	16.43%	Normal (-3% vs avg)
XLRE (Real Estate)	15.64%	Normal (-22% vs avg)
XLC (Comm Services)	13.79%	Low (-43% vs avg)

Materials (XLB) at 26.8% IV stands out as the only elevated reading, sitting 22% above historical averages. This reflects uncertainty in commodity-sensitive names amid China demand questions and year-end positioning.

Financials (XLF at 13.4%) and Communication Services (XLC at 13.8%) remain extremely calm—over 20% below historical averages. Markets see no credit stress or fundamental concerns in these sectors despite broad selling.

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Weekly Perspective: Jobs Data Weighs

Date	A/D Ratio	Advances	Declines	VIX	Near 52w High	Near 52w Low
Dec 11	2.80	358	128	14.85	51	4
Dec 12	0.79*	221	280	15.74	14	4
Dec 15	1.48	174	118	16.50	22	1
Dec 16	0.36	133	368	16.51	6	0

*Dec 12 breadth based on ~75% of S&P 500 stocks due to data provider gap.

The week has seen significant breadth deterioration. From Thursday’s strong 2.80 A/D ratio, we have fallen to Tuesday’s 0.36—the weakest reading since early November. New highs collapsed from 51 to just 6, reflecting narrowing leadership.

However, stocks near 52-week lows dropping to 0 is a silver lining. Even on the worst breadth day of the month, no stocks are breaking to new lows. This suggests the selling is profit-taking and repositioning, not capitulation or breakdown.

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Moving Average Analysis

Moving Average	% Above	Interpretation
20-Day MA	44.3%	Weak short-term (below 50%)
50-Day MA	41.6%	Weak intermediate trend
200-Day MA	45.1%	Neutral long-term

All three major moving average readings are below 50%, indicating breadth weakness across all timeframes. The 20-day at 44.3% shows short-term damage, while the 200-day at 45.1% suggests the longer-term trend remains intact but fragile.

These readings are not at extreme levels (below 30% would signal oversold conditions), but they do confirm the breadth deterioration is meaningful.

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What This Means for You

If You’re Long Through the Jobs Weakness

The 4.6% unemployment rate is a warning sign but not a crisis. The labor market is cooling, which is actually what the Fed wanted to see. However, with CPI Thursday, you face another potential volatility event.

Consider:

• Reviewing positions in rate-sensitive sectors
• Accepting near-term volatility if your timeframe is longer-term
• Using the weakness to add to quality names at better prices

If You’re in Cash

Thursday’s CPI creates opportunity either way. A cooler-than-expected reading could spark a relief rally. A hot print could extend the selling and provide better entry points.

The zero stocks near 52-week lows suggests there is no capitulation yet. True buying opportunities often come when that number spikes higher.

If You Own Tech Exclusively

Your concentration risk is showing. Tech outperformed today (+0.23% Nasdaq vs. -0.62% Dow) but breadth tells you most stocks sold off. A narrow market can turn quickly.

Consider:

• Diversification: Spreading into beaten-down sectors
• Hedging: Protecting gains with puts or collars
• Taking profits: Booking some gains after a strong year

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What to Watch Ahead

1. Thursday CPI (8:30 AM ET): The main event. Consensus expects 3.1% headline and 3.0% core. A surprise in either direction will move markets.
2. Jobless Claims (Thursday): Watch for follow-through on labor weakness. Claims above 240,000 would extend concerns.
3. Breadth Recovery: Does the A/D ratio improve from 0.36? A bounce with breadth would be constructive.
4. Small Cap Behavior: Russell 2000 underperformed (-0.45%). Watch for stabilization.
5. New Highs Recovery: Can the 6 reading improve? 15+ would show returning confidence.

The market is now in a holding pattern between today’s weak jobs data and Thursday’s inflation reading. CPI will determine whether the Fed can continue easing or needs to pause.

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The Bottom Line

Tuesday delivered the month’s weakest breadth with an A/D ratio of 0.36 as 368 stocks declined versus just 133 advancing. The Dow dropped 0.62% while the Nasdaq managed a 0.23% gain on mega-cap strength—a classic narrow market day.

The weak jobs report—with unemployment hitting a 4-year high of 4.6%—drove the selling. Despite the broad weakness, the VIX held flat at 16.51 and no stocks hit new 52-week lows. This is orderly repositioning, not panic.

Stocks near 52-week highs collapsed from 22 to 6, indicating rapidly narrowing leadership. The moving average analysis confirms weakness with all three readings below 50%.

Thursday’s CPI will set the tone for year-end trading. A cooler-than-expected reading could ease stagflation concerns and spark a relief rally. A hot print would add to worries about the Fed’s ability to continue easing. The market is caught between weakening labor data and sticky inflation—Thursday provides the next data point to resolve that tension.

This analysis is provided for informational purposes only and should not be considered investment advice. Always conduct your own research before making investment decisions.