EB Daily Market Report - Wednesday, December 3, 2025

Executive Summary

• Futures were mixed overnight and small caps were higher at the opening bell
• Small caps have led all day, though buying has been strong across all of our major indices throughout the trading session
• Large cap growth (IWF, +0.08%) has once again trailed large cap value (IWD, +0.93%) as that rotation continues
• Energy (XLE, +1.78%) is leading the action as the XLE approaches multi-year resistance in the 92-93 area
• Financials (XLF, +1.32%) are also strong, led by investment services ($DJUSSB, +2.08%) and banks ($DJUSBK, +1.99%)
• Utilities (XLU, -0.23%) is the only sector losing ground today
• Transportation stocks ($TRAN, +1.86%) remain hot as truckers ($DJUSTK, +4.17%) and airlines ($DJUSAR, +3.32%) lead industrials (XLI, +0.86%)
• Cryptocurrencies stage rally, led by etherium ($ETHUSD, +4.90%)
• A negative ADP employment report for November has spurred hopes of a December rate cut, with areas like small caps (IWM, +1.77%) leading the charge

Market Outlook

The following is a 20-year weekly chart of the S&P 500 that highlights the increased volatility experienced in U.S. stocks since Fed Chief Jerome Powell took over:

The rate of change (ROC) in the bottom panel is the 13-week, or one quarter, rate of change. After the 2008/2009 financial crisis and a few aftershocks thereafter, volatility calmed down for the next 7-8 years.....until Fed Chief Powell took over. Since then, you can see that the quarterly volatility has spiked considerably, despite the overall market direction staying mostly on track. This tells me that U.S. stocks will continue to track higher over time, but that a waffling Fed can add a TON of volatility to the picture, which is exactly what I believe Powell has added.

Sectors/Industries

Steel ($DJUSST) is an industry group that I've started talking more about recently and it's certainly a beneficiary of the recent rotation away from many growth areas. It looks as if the DJUSST has more room to the upside before challenging its April 2024 price high:

ChartLists and Trading Strategies

I could argue that 5 of the best industry groups right now are:

(1) computer hardware ($DJUSCR)
(2) internet ($DJUSNS)
(3) commercial vehicles & trucks ($DJUSHR)
(4) aluminum ($DJUSAL)
(5) steel ($DJUSST)

While I've definitely turned much more cautious the overall market, and especially growth stocks, I'd consider trading in areas that are showing the most current relative strength and the five groups above are certainly on the short list of the best current performers.

Running a scan of the top SCTRs (StockCharts Technical Rank) in these 5 industries among our key ChartLists would look something like this:

Here were the stocks returned:

Of these, WDC and JMIA are both testing their rising 20-day EMAs. CAT is probably my favorite on the list, but it's hitting price resistance and could be establishing the right side of a cup.

Upcoming Earnings

Earnings season is mostly over for Q3, so we'll wait until Q4 earnings season kicks off in mid-January before publishing our Upcoming Earnings ChartLists and Upcoming Earnings Relative Strength ChartList.

Economic Reports

ADP employment report: -32,000 (actual) vs. +40,000 (estimate)

September industrial production (delayed): +0.1% (actual) vs. +0.1% (estimate)

September capacity utilization (delayed): 75.9% (actual) vs. 77.3% (estimate)

November PMI services: 54.1 (actual) vs. 55.0 (estimate)

November ISM services: 52.6% (actual) vs. 52.5% (estimate)

Happy trading!
Tom