CWS Market Review – December 9, 2025

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How much is cash worth? We’ll soon learn the answer. Paramount has launched a hostile takeover bid for Warner Bros. Discovery. Netflix already announced a deal for WBD, but that was in cash and stock. Specifically, Netflix offered $27.75 per share for WBD. That’s $23.25 per share in cash and $4.50 in stock. Paramount is offering $30. All cash.

The details get a little tricky because WBD’s cable holdings aren’t in the Netflix deal. If those are spun off, that could be very lucrative while Paramount is trying to buy all of WBD. What I like is that Paramount is bringing its offer directly to WBD shareholders. Personally, I’d lean toward the Paramount offer.

The S&P 500 Nears a New High But Doesn’t Quite Make It

Through Friday, the S&P 500 rallied nine times in 10 sessions. The index got within 0.5% of a new all-time high. Then it lost its nerve and quickly backed off. The S&P 500 lost ground yesterday and today, albeit by a very modest amount.

Will the market rally through to a new high? I can’t say, but if it does then the Federal Reserve would be an ideal catalyst. The Fed began its two-day meeting today. Tomorrow afternoon, the central bank will release its policy statement, and it’s widely accepted that the Fed will cut interest rates again. This would be the third cut in as many meetings.

If the Fed cuts by 25 basis points, then it would bring the Fed’s target range for its Fed funds rate to 3.50% to 3.75%. This is the overnight lending rate that banks use between themselves. Over the last year, through September, core inflation is running at 3%. A Fed cut would lower the real interest rate, meaning adjusted for inflation, to a range of 0.50% to 0.75%. That’s low by historical standards, but there’s room to go lower.

There could be some drama at this meeting. I’m curious what the vote will be. For the first time in many years, there may be a rift among FOMC members. Jerome Powell appears to be fine with a rate cut this week, but I sense he’s not fully onboard with another rate cut next month, while some members are.

Even though the C in FOMC stands for committee, it’s rare to see divisions within the Fed. The Fed prefers to make its moves by consensus. Sometimes you’ll see minor dissents, but nothing too dramatic. By and large, the chair gets their way. A Fed chairman hasn’t been outvoted in over 40 years.

But Powell is a lame duck. That may change things. Powell will be out as Fed chair in May, and Kevin Hassett is the leading candidate to be President Trump’s pick. Powell was initially appointed by President Obama. He was then elevated to Fed chair by President Trump and reappointed by President Biden.

The FOMC meeting will conclude tomorrow, and the policy statement will be released at 2 pm ET. For the January meeting, the odds of a Fed rate cut are at just 23%. After cutting rates tomorrow, traders see the Fed taking a six-month break. With tomorrow’s decision, we’ll also get the Summary of Economic Projections, otherwise known as the dot plot. This will tell us more about the Fed’s plans for 2026 and beyond.

The key for investors is to watch for the health of the jobs market. Remember that more workers translates to more shoppers. The Labor Department released its jobs openings report today, (ie, the JOLTS report). The report said that the number of job openings for October rose to a five-month high.

That’s the good news. The bad news is that job openings increased a tiny bit, from 7.66 million to 7.67 million. Also, layoffs rose to 1.85 million which is the highest since early 2023. Hiring fell by 218,000.

Healthcare has been the big jobs driver all year. Outside that, the numbers haven’t been that impressive. This fits the overall pattern we’ve seen: a stagnant jobs market. The reality is that consumers and businesses are struggling to deal with higher costs.

Also, we may have to put a big asterisk on today’s numbers from the JOLTS report. The BLS said that because of the government shutdown, it had to stop using its regular methods. The next JOLTS report will be out on January 7.

The phrase that’s been making its way around economists these days is “no hire, no fire.” In other words, the unemployment rate is still quite low by historical terms, but companies aren’t willing to hire new employees.

Hiring has slowed down, especially for new college graduates. It’s as if the economy has hit a perfect equilibrium where businesses aren’t willing to shed staff, but they’re weighed down by costs and uncertainty so they’re not hiring either. I don’t expect this balance much longer. Soon, firings will be hard to ignore.

Home Deport Offers Cautious Guidance

Shares of Home Depot (HD) were weak today after the company gave disappointing guidance. I like to pay attention to what Home Depot has to say. They probably have a better understanding of consumer spending than many official government reports.

Home Depot has struggled lately. Over the last three months, the S&P 500 is up around 5% while HD is down by 15%.

For fiscal 2026, the home improvement store expects sales growth of 2.5% to 4.5%. That unnerved some traders. Wall Street had been expecting 4.5%.

Home Depot also said it expects EPS growth to be flat to +4%. For comparable sales, HD sees growth of flat to +2%. Of course, a lot of this will depend on the housing market. For the current fiscal year, HD sees EPS falling by about 6%. Home Depot isn’t alone. Toll Brothers and Hovnanian both said that demand is being held back by high mortgage rates and worries about the tariffs. So much of the broader economy is closely tied to the housing market.

On the plus side, the Russell 2000 Index of small-cap stocks hit a new high today. The Russell 2000 has lagged the market consistently for the last five years. Every prediction of a rotation to the little guys has flopped. Well, it’s happening again. The Russell 2000 has outpaced the S&P 500 for the last month. I hope this trend continues, but I won’t make any promises.

One of the more difficult aspects of investing that’s hard to convey to a new investor is just how big the big companies are. The giant blue-chip behemoths dominate the investing world, and everyone else is running behind.

Consider that if all 2,000 stocks in the Russell 2000 merged to form one super company, it still would be far from the largest company on Wall Street. The combined value is currently around $2.7 trillion. The Russell 2000 makes up for just 7% of the Russell 3000. The five largest companies in the S&P 500 make up slightly more than 25% of the index.

Financial stocks have also improved in recent weeks. Goldman Sachs (GS) and Bank of New York Mellon (BK) both hit new highs today. A wider yield spread is good for the banks. Tech has also been acting better in recent days, but it’s still lagging several sectors over the last month.

I hope you don’t mind if I brag a little about IES Holdings (IESC). I mentioned this stock to you three weeks ago, just before its earnings report. The company currently operates through four business segments: Electrical, Communications, Infrastructure and Residential. It’s been a huge winner for us this year.

On November 21, the company reported outstanding results for its fiscal Q4, and the shares rallied 8.5%. Revenue rose 16% to $898 million. Operating income was up 39% to $104.3 million, and diluted adjusted EPS was $3.77 compared with $2.61 one year ago.

I had already told you some of this story a few weeks ago, but the latest news is that the stock has rallied even more. The stock has closed higher for the last six days in a row. The stock reached another all-time high. IESC is up 27% since I first told you about it, and 125% since I first added it to our Buy List a year ago.

That’s all for now. The Federal Reserve meeting wraps up tomorrow. The policy statement will be out on Wednesday at 2 pm ET. I’ll have more for you in the next issue of CWS Market Review.

– Eddy

Posted by on December 9th, 2025 at 5:27 pm


The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.