Mid-Morning Look

Tuesday, December 23, 2025

U.S. stocks doing a whole lot of nothing as investors on Wall Street digest news that the U.S. economy grew at its fastest rate in years, far exceeding economists’ projections for the third quarter. Inflation-adjusted GDP expanded at an annualized rate of 4.3% from July through September, topping expectations of 3.3% and above the 3.8% growth in Q2. That makes this the best quarter for GDP growth since Q3’23 when the economy expanded by 4.7% (note the report had been delayed by the recent government shutdown). While markets loved the strong growth, they didn’t like the hotter GDP price deflator which rose 3.7%, well above the consensus of +2.7%. PCE increased by 2.8% in the third quarter, compared with an increase of +2.1% in Q2, and Core PCE, which ex: food and energy prices rose +2.9%, vs. +2.6% in prior quarter (Treasury yields rose on the data). The stronger GDP and hotter inflation data pared expectations of an FOMC January rate cut and is weighing on Smallcap stocks and other interest rate sensitive names early. Commodity prices are volatile with new all-time highs this morning (again) for gold, silver (tops $70 an ounce for first time) and copper (and surges in palladium/platinum). The Dollar index (DXY) pares losses to -0.23%, back above the 98 level (from 97.91 prior) after U.S. GDP data shows stronger-than-expected growth in the third quarter. Ten-year Treasury yields turn higher, up 2.1 basis points at 4.192%, up from 4.151%.Early sector leaders Utilities, Financials and Communications (small gains), while Consumer Staples, Technology and REITs are down the most on negative mkt breadth.

• On GDP inflation data, US advance Q3 GDP deflator +3.7%, hotter than the consensus +2.7% while US advance Q3 PCE price index +2.8% (in-line with consensus +2.8%) and US advance Q3 core PCE +2.9% (in-line with consensus +2.9%)
• US Oct Durables orders fell -2.2% (vs. consensus -1.5%) and vs Sept +0.7% (prev +0.5%); Oct Durables ex-transportation orders +0.2% (cons +0.3%) vs Sept +0.7% (prev +0.6%); U.S. Oct Durables ex-defense orders -1.5% vs Sept +0.1%.
• U.S. Oct Gen. Machinery orders +0.8%, electrical Equipment -1.5%, Defense Aircraft/parts -32.4%; Oct nondefense cap orders ex-aircraft +0.5%, (cons +0.4%) vs Sept +1.1% (prev +0.9%); Oct Durables shipments +0.6% vs Sept +0.1%; Oct nondefense cap shipments ex-aircraft +0.7% vs Sept +1.2%.
• November Industrial Production climbs +0.2% M/m, slightly above the consensus est. +0.1% while the U.S. Capacity Utilization rate actual 76.0% vs 75.9% previous and est 75.9%.
• December Consumer Confidence index 89.1 below consensus 91.0 and vs Nov revised 92.9 (previous 88.7), while Present Situation: 116.8 (prev 126.9) and expectations: 70.7 (prev 63.2).
• Richmond Fed composite manufacturing index -7 in Dec vs -15 in November, Richmond Fed manufacturing shipments index -11 in Dec vs -14 in November and services revenues index -6 in Dec vs -4 in November.

• Commercial Services: RBC Capital provides 2026 outlook for the sector saying they reiterate Outperform ratings on APG, ECL and ROL. Looking ahead to 2026, RBC expects Commercial Services stock performance to better align with earnings and FCF growth, assuming no major macroeconomic shifts. ROL’s recession-resilient business, steady revenue growth, and higher incremental margins position it well for the future. APG should benefit from a constructive narrative and revenue growth exceeding mid-term targets. Lastly, ECL’s commitment to 12-15% EPS growth and its defensive material focus bode well for the stock. CTAS remains one of the best execution stories while ADT appears attractively valued.
• In Oil & Gas E&P: SOC shares rallied after saying in an 8K that on Dec 22, US PHMSA approved the company’s restart plan for las flores pipeline system. Natural gas producers (CRK, CTRA, EXE, RRC) advanced early behind a bounce in natural gas prices back above $4 per million British thermal unit, getting a boost by record gas flows to liquefied Natural gas export plants and forecasts for more demand than previously expected over the next two weeks.

• HII +1%; as the U.S. military shipbuilder shares jumped after President Trump announced plans for a new “Trump class” of battleships, which he said would be larger, faster and “100 times more powerful” than any previously built.
• NVO +8%; after the U.S FDA approved the drugmaker’s weight-loss pill. The pill is 25 milligrams of semaglutide, the same active ingredient in injectable Wegovy and Ozempic, and will be sold under the brand name Wegovy. Novo already sells an oral semaglutide for type 2 diabetes, Rybelsus.
• PSN +3%; after saying it secures Missile Defense Agency’s SHIELD contract, with a ceiling value of $151 billion; contract designed to accelerate delivery of advanced capabilities to war fighters with increased speed and agility.
• SOC +14%; shares rallied after saying in an 8K that on Dec 22, US PHMSA approved the company’s restart plan for las flores pipeline system.
• ZIM +7%; after saying it was evaluating buyout proposals from multiple parties; noted their Board has rejected revised proposal from entity owned by CEO Eli Glickman, and Rami Ungar citing undervaluation; the company says its strategic review announced last month is in advanced stage.

• HOOD -3%; as Bitcoin related plays (COIN, MSTR) weak as Bitcoin again fails on bounce, down on the day.
• LLY -1%; on competition concerns after NVO rival weigh loss drug got US approval
• MRNA -4% among early decliners in S&P in vaccine space
• NOW -2%; after agreed to acquire cybersecurity startup Armis for about $7.75 billion in cash in a move intended to take advantage of growing demand for AI security.