Market Pulse: Thursday, December 18, 2025

The November CPI report landed exactly where economists expected: 2.7% year-over-year headline inflation with 3.0% core CPI. This “Goldilocks” print—neither hot enough to panic the Fed nor cold enough to signal economic weakness—sparked a relief rally across markets. Breadth improved significantly to 1.12, with 264 stocks advancing versus 236 declining. More importantly, advancing volume jumped to 58.6%, showing conviction behind the buying. It was the market’s best breadth day in a week.

---

November CPI Report: Key Numbers

The Bureau of Labor Statistics released the highly anticipated Consumer Price Index data this morning:

Metric	Actual	Expected	Prior Month
Headline CPI (YoY)	2.7%	2.7%	2.6%
Core CPI (YoY)	3.0%	3.0%	3.3%
Headline CPI (MoM)	0.2%	0.2%	0.2%
Core CPI (MoM)	0.3%	0.3%	0.3%

The report showed inflation continues its gradual descent toward the Fed’s 2% target. While core inflation remains sticky at 3.0%, it’s down from 3.3% the prior month—a meaningful step in the right direction. This data supports the Fed’s recent 25 basis point rate cut and keeps the door open for additional cuts in 2026, though Fed officials have indicated a more measured pace going forward.

For deeper context on how inflation trends affect your financial planning, explore our inflation analysis tools and retirement calculators.

---

Market Breadth: Strong Rebound

Metric	Today (Dec 18)	Wednesday (Dec 17)	Tuesday (Dec 16)
Advance/Decline Ratio	1.12	1.05	0.36
Advances	264	257	133
Declines	236	244	368
Advancing Volume	58.6%	39.4%	43.3%
Stocks Near 52-Week Highs	9	8	6
Stocks Near 52-Week Lows	0	0	0

What the Numbers Say

Today’s 1.12 A/D ratio marks a notable improvement from yesterday’s 1.05 and a dramatic turnaround from Tuesday’s weak 0.36 reading. But the real story is advancing volume surging to 58.6%—a sharp jump from yesterday’s 39.4%. When breadth improves and volume confirms the move, it signals institutional conviction, not just retail enthusiasm.

The new 52-week highs ticked up to 9, the highest count in over a week. Meanwhile, stocks near 52-week lows remained at zero for the fourth consecutive day. This resilience at the lows, even during recent tech turbulence, suggests buyers continue to defend key support levels.

Want to understand how market breadth fits into your investment strategy? Our tools can help you track these trends.

---

Market Performance: Post-CPI Relief Rally

Index	Close	Change	% Change
S&P 500	5,931.74	+59.58	+1.01%
Dow Jones	43,603.24	+153.34	+0.35%
Nasdaq	19,750.55	+357.86	+1.84%
Russell 2000	2,256.57	+25.12	+1.12%

The Nasdaq led the rebound with a 1.84% gain, recouping much of yesterday’s AI-driven losses. The S&P 500 rose 1.01%, its best day in over a week. Small caps (Russell 2000 +1.12%) kept pace with the broader market, suggesting the rally had healthy participation across market caps.

The Dow lagged at +0.35%, weighed down by Nike’s 6% drop after disappointing earnings guidance. But even that couldn’t dampen the overall bullish mood as the benign CPI print validated the Fed’s recent policy moves.

---

VIX and Volatility: Fear Gauge Retreats

Metric	Today (Dec 18)	Wednesday (Dec 17)	Tuesday (Dec 16)
VIX Level	16.87	17.62	16.51

The VIX dropped 4.3% to 16.87, reversing yesterday’s fear spike. This move confirms the CPI-driven selloff was positioning rather than genuine panic. With VIX back below 17, options markets are signaling a calm year-end.

Options markets are showing normalization across sectors:

• SPY IV: 11.20% (low, -34% vs historical avg)
• QQQ IV: 16.43% (normal, -25% vs avg)
• XLK IV: 22.21% (normal, -3% vs avg)
• XLF IV: 13.48% (low, -36% vs avg)
• XLY IV: 55.23% (extreme, +176% vs avg)

Most sectors have calmed down, with the notable exception of Consumer Discretionary (XLY) which remains elevated—likely reflecting Tesla and broader EV uncertainty. The low IV across financials and the broad market suggests complacency heading into year-end.

---

Headlines Moving Markets

Several catalysts drove Thursday’s post-CPI rally:

CPI “Goldilocks” Print: The in-line November CPI reading (2.7% headline, 3.0% core) was exactly what markets needed. Not hot enough to derail Fed rate cuts, not cold enough to signal recession. Markets rallied on the validation of the Fed’s recent 25 bps cut.

AI Stocks Bounce: After yesterday’s brutal selloff, chip stocks mounted a relief rally. Nvidia and AMD recovered a portion of Wednesday’s losses as dip-buyers emerged. The AI trade isn’t dead—just taking a breather after an incredible 2025 run.

Nike Stumbles on Guidance: Nike (NKE -6%) fell sharply after management said turnaround plans are still “in the middle innings.” The Dow’s laggard performance can be attributed largely to Nike’s weight in the index.

FedEx Delivers: FedEx (FDX +3%) rose after reporting improved profit guidance, with its key business showing signs of turnaround. A positive signal for the broader economy and holiday shipping season.

Micron’s Nvidia Moment: Analysts are comparing Micron’s (MU) AI-driven memory demand surge to Nvidia’s data center breakout. The stock remains volatile but the long-term AI infrastructure thesis stays intact.

Fed Officials Stay Cautious: Fed’s Waller expects inflation to “start falling in 3-4 months” and rates to come down at a “moderate pace.” Fed’s Bostic was more hawkish, expecting no cuts in 2026 due to GOP tax bill inflation concerns. Mixed messages keep markets guessing.

---

Technical Snapshot

The S&P 500’s 1.01% gain puts it back above key support levels. Key levels to watch:

• Resistance: 5,950 (recent highs)
• Current: 5,932 (back above 20-day MA)
• Support: 5,850 (20-day moving average)
• Critical Support: 5,750 (50-day moving average)

The Nasdaq’s 1.84% bounce suggests the tech selloff may have been a one-day event rather than the start of a larger correction. The index is back above its 20-day moving average and well clear of the 50-day.

Breadth confirmation is the key story: when indices rise AND breadth improves (as it did today with 58.6% advancing volume), the rally has staying power. Watch for follow-through tomorrow.

---

Looking Ahead: Friday, December 19

Tomorrow brings:

• Existing Home Sales (Nov) — Watch for housing market resilience amid high rates
• University of Michigan Consumer Sentiment (Final Dec) — Consumer mood heading into holidays
• NY Fed President Williams TV appearance — More Fed communication

The setup into year-end is constructive: CPI in line, breadth improving, VIX cooling. Light holiday volumes could amplify moves in either direction, but the foundation looks solid for a Santa rally.

---

Bottom Line

Today was textbook “buy the rumor, sell the… wait, the news was good.” The benign CPI print validated the Fed’s rate cut, sparked a relief rally, and improved breadth significantly. The A/D ratio at 1.12 with 58.6% advancing volume shows institutions are buying, not just retail traders chasing.

The message from market internals: this is a healthy market digesting year-end uncertainty, not one on the verge of breaking down. Zero stocks at 52-week lows for four straight days. VIX back below 17. Tech bouncing after yesterday’s selloff.

Heading into the holiday season, the path of least resistance appears higher. But stay nimble—light volumes can cut both ways.

---

Market Pulse provides daily analysis of S&P 500 market breadth, sector rotation, and volatility signals to help investors understand what’s happening beneath the surface. Data sourced from our real-time market breadth collectors. For personalized planning, explore our retirement calculators, investment tools, and FIRE planning resources.