The December Rebound Party Is Here—But Should You Trust It?
The stock market kicked off December with a deceptive stumble on Monday, but smart money knows better than to take one red day at face value.
While the S&P 500 dipped 0.5% and the Dow shed roughly 0.9% to start the week, the real story isn’t the profit-taking—it’s the massive repricing of risk happening beneath the surface.
Investors are currently caught in a high-stakes tug-of-war between a softening economy and a Federal Reserve that finally looks ready to ride to the rescue. Let’s look at the hard numbers driving this week’s narrative.
The Fed Pivot: From “Maybe” to “87% Certainty”
The most critical number on Wall Street right now is 87%. According to the latest interest rate probability data, that is the implied likelihood of a 25-basis-point rate cut at the Fed’s upcoming December 10th meeting.
To understand how aggressive this shift is, rewind just two weeks: markets had priced in less than a 30% chance of a cut. The rapid U-turn was triggered by a coordinated shift in tone from Fed officials. Governor Christopher Waller and New York Fed President John Williams—both influential voices on the committee—dropped clear hints that policy is currently “restrictive enough” given the cooling labor data.
Wall Street giants have immediately fallen in line. JPMorgan, Goldman Sachs, and Bank of America all revised their forecasts this week, now calling for a December cut followed by a potentially steeper path of easing in 2026. The consensus is shifting toward a terminal rate of 3.00%–3.25% by mid-2026, a level that would significantly lower borrowing costs for growth companies and consumers alike.
The Economic “Why”: Manufacturing Is Screaming for Help
Why the urgency for a cut? Because the engine room of the US economy—manufacturing—is flashing red.
The ISM Manufacturing PMI for November dropped to 48.2, sinking deeper into contraction territory (anything below 50 signals a slowdown). This marks the eighth consecutive month of shrinking factory activity. The details inside the report were even uglier:
• New Orders: Collapsed to 47.4, signaling that future demand is drying up.
• Employment Index: Fell to 44.0, a three-month low that suggests factories are actively shedding workers or freezing hiring.
However, there is a “sting in the tail” that complicates things: Inflation isn’t dead. The “Prices Paid” index within the ISM report actually jumped to 58.5, up from 58.0. This creates a headache for the Fed: growth is slowing (bad), but input costs are rising (also bad). It’s a whiff of “stagflation-lite,” but for now, the market is betting the Fed cares more about saving jobs than fighting sticky manufacturing prices.
Stock Spotlight: Intel’s Rollercoaster Week
If you want drama, look no further than Intel (INTC). The stock was the undisputed protagonist of the week, surging nearly 10% on Friday before giving back some gains on Monday.
Two massive stories are colliding here:
1. The Apple Rumor: Famous tech analyst Ming-Chi Kuo dropped a bombshell report suggesting Intel is in talks to supply proprietary M-series chips for Apple by 2027. While likely low-volume initially, winning a contract with the world’s most valuable company would validate Intel’s expensive foundry strategy and prove it can compete with TSMC on quality.
2. The Leadership Shakeup: Overshadowing the rumor is the abrupt resignation of CEO Pat Gelsinger. After a turbulent four-year tenure where Intel lost ~60% of its value and suspended its dividend, the board finally pulled the plug. The market’s reaction has been volatile because while Gelsinger’s exit signals accountability, it also leaves a leadership vacuum at a critical moment for the company’s turnaround.
The Crypto Whale: MicroStrategy’s $1.5 Billion Bet
Bitcoin started December volatile, swinging from highs of $92,000 down to the $85,000 range, but MicroStrategy (MSTR) is doubling down.
The company announced a fresh purchase of 15,400 Bitcoins between late November and December 1st, spending approximately $1.5 billion at an average price of roughly $96,000 per coin. This brings their total war chest to a staggering 402,100 BTC, valued at over $38 billion.
But the bigger news for MSTR shareholders is likely the Nasdaq 100 inclusion. The stock is set to join the prestigious index (replacing a smaller player), which forces millions of dollars in passive index funds (like the QQQ ETF) to buy the stock. This creates a structural tailwind for share demand, regardless of day-to-day Bitcoin price action. However, risks remain: the company’s stock momentarily traded at a discount to its Net Asset Value (NAV) on Monday—a rare anomaly that suggests investors were briefly terrified of a crypto correction.
The Verdict: A “Show Me” Month
History is on the bulls’ side. Since 1950, December has been the third-best month for the S&P 500, averaging a 1.4% gain and finishing positive 74% of the time.
The setup for a year-end rally is there:
• Catalyst: A likely Fed cut on Dec 10.
• Liquidity: MicroStrategy and Intel stories showing aggressive capital deployment.
• Seasonality: The famous “Santa Claus Rally” window opens in late December.
The Trade: Watch the jobs report this Friday. If unemployment ticks up, the “87% probability” of a rate cut becomes 100%, and growth stocks could fly. But if inflation data comes in hot, that “December Party” might get shut down by the police before it even starts. Stay nimble.