Market Recap - Week of December 8 through December 12, 2025

The S&P 500 index slipped 0.6% this week, weighed down by the communication services and technology sectors amid concerns about the artificial-intelligence boom.

The S&P 500 ended Friday's session at 6,827.41. The index is now down 0.3% for the month but up 16% for the year with just a few weeks remaining in 2025.

The Federal Reserve's Federal Open Market Committee on Wednesday reduced its benchmark lending rate by 25 basis points amid continued concerns about the health of the labor market. The cut, the FOMC's third consecutive quarter-percentage-point cut, was expected.

Investors were, however, surprised by details in quarterly results from Oracle and Broadcom that raised concerns about spending amid the AI boom.

Oracle's fiscal Q2 adjusted earnings (profit) per share surpassed analysts' expectations, but its revenue (income) missed the Street view. The revenue miss came as "softer cloud revenue and heavy AI data-centre spending raised questions about debt-funded expansion," according to a note from Saxo Bank. The stock fell 13%.

Broadcom posted higher-than-expected adjusted earnings per share for its fiscal Q4 but issued a warning that fiscal Q1 consolidated gross margins will decline sequentially amid a bigger mix of AI-related revenue. The stock fell 7.8%.

Communication services led the S&P 500's declining sectors the week, falling 3.2%, followed by a 2.3% drop in technology and a 1.1% loss in utilities. Real estate and energy also edged lower.

Economic data will include the government's delayed report on November employment, which will include some of October's job numbers as well. The consumer price index for November will also be released, along with some delayed October figures.

Last Week’s Economic Reports

Job openings rose to a five-month high of 7.67 million
Quits rate fell to a five-year low of 1.8%. (Indicates people are nervous they won't be able to find a replacement job.)

S&P 500 Sector and Stylebox Returns

How to read the stylebox: The horizontal axis represents investment style, which can be value, blend, or growth for stocks and mutual funds. The vertical axis represents market capitalization for stocks, categorized into large, medium, and small companies. The number in each box represents the percentage growth of the category that is the intersection of the column and the row. For example, large-cap value is in the top-left corner of the box, so the large-cap value category is up by 12.4% YTD (year-to-date).

Thought of the Week

Despite being a small part of the economy, the AI data center build-out has quietly become a key driver of growth this year. While many households have not felt this boom directly, they are likely to feel its knock-on effects, particularly in their utility bills.

As the chart shows, electricity inflation tracked CPI over the past decade, but in the last five years it has accelerated ahead of CPI. This shift reflects a surge in demand, driven partly by broader electrification but increasingly by power-hungry AI infrastructure. Datacenters have existed for years, but AI facilities are far more energy-intensive: a single AI search can consume around 10 times more energy than a basic web search. After growing about 0.5% annually over the two decades through 2020, conservative estimates project that electricity demand will grow more than three times as fast this decade. On the supply side, although the administration has declared an “energy emergency,” paving the way for more fossil fuels and even nuclear power plants, these projects will take time to come online.

Meanwhile, consumers could face higher near-term inflation, as there’s a risk of a repeat of what happened in 2023-24: despite its modest weight, auto insurance became a sticky source of inflation. Electricity has a similar weight and, like auto insurance, is subject to regulatory pass-throughs that allow higher costs to be passed on to consumers.

With the next inflation print due this week, investors may want to watch electricity prices closely. Those looking to hedge against an inflation flare-up, while also benefiting from the AI build-out, might want to consider private infrastructure funds positioned to ride this AI-led demand wave.

Source: JP Morgan (edited)

Up Next

Economic data will include the government's delayed report on November employment, which will also include some of October's job numbers. The consumer price index for November will also be released, along with the October figures.

Thank you to all who attended this month's market Update webinar!

You can watch the replay here:

https://www.youtube.com/watch?v=1w1MmNOLS48

The episode is also available wherever you listen to podcasts!