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Homebuyers are utilizing adjustable rate mortgages more often amid high interest rates.

Key Takeaways

• Approximately 10% of borrowers in September took out an adjustable-rate mortgage to purchase a home.
• Adjustable-rate mortgages contributed significantly to the 2008 housing crisis, as many borrowers with poor credit struggled to make payments when their rates increased.
• However, mortgage experts said lending standards have improved since then, reducing the likelihood of widespread impacts on the housing market.

High mortgage rates have been overwhelming homebuyers for the past three years, and some are turning to a mortgage option that helped fuel the 2008 housing crisis.

Adjustable-rate mortgages (ARMs) offer fixed introductory rates that later adjust—typically to a higher rate—to reflect current market conditions. These loans are becoming more popular with homebuyers as mortgage rates remain persistently above 6%.

While those homeowners risk having a bigger monthly mortgage payment in a few years, housing industry officials said better lending standards are minimizing the dangers of these loans.

"In the current timeline, these buyers still are at minimal to low risk," said Phil Crescenzo Jr., vice president of the Southeast Division at Nation One Mortgage Corporation, in an email interview.  

Why This Matters for the Housing Market

Rising ARM usage underscores how sustained affordability pressures are reshaping household behavior within the broader U.S. economy. As borrowers gravitate toward loans that reduce payments in the near term, even at the risk of higher costs later, it reflects the strain that elevated interest rates, tight housing supply, and slow income growth continue to place on family budgets.

Data from the Mortgage Bankers Association show that use of ARMs has increased in the past three years. About 10% of borrowers in September opted for the loan, compared to 6% of buyers who used ARMs after the 2008 housing crash. ARMs are also increasingly being used in new home purchases. In October, they accounted for a quarter of home purchases, up from 16% in the same month of the prior year.

“In this environment where borrowers are struggling with lack of affordability, moving to an ARM can result in real savings,” wrote MBA Deputy Chief Economist Joel Kan.

Borrowers Turn to ARM Loans as Mortgages Rise

When mortgage rates were at their recent lows in 2021—falling below 3% at times—usage of ARMs dropped off, too, MBA data showed. However, after mortgage rates rose by more than three percentage points in 2022, at times surging over 7%, borrower demand for adjustable-rate loans responded in kind.

ARMs can offer home buyers significant savings. According to MBA data, a five-year ARM loan in October offered borrowers an initial rate of 5.58%, compared to the 6.37% rate for traditional mortgage loans over the same period. For a $400,000 loan, the savings in monthly payments could be approximately $200 a month. 

One reason more borrowers are relying on ARMs is that the adjustable-rate loan has become a better value in 2025 as short-term interest rates have declined, providing a more favorable introductory rate, Kan wrote. 

“It is not surprising that the ARM share has increased, and we expect it will increase further in 2026,” Kan wrote.

ARMs Offer Value While Lenders Have Reduced Risks

ARMs typically offer a lower introductory rate that increases after a specified period. For example, the commonly used 5/1 ARM offers a five-year introductory rate, and is then adjusted each year after that. The terms often include a cap on the maximum rate.

For ARM borrowers, it's often a matter of timing, as they may be stuck with higher rates once the introductory period ends.  

“If you are a homeowner with this loan, you would watch the market to refinance into a fixed rate and avoid the adjustable period altogether,” Crescenzo Jr. said.

If rates are higher when the introductory period expires, he explained, the borrower might be hit with higher payments that they can't afford.

That was what set off the housing market meltdown that came to fruition in 2008, when borrowers with poor credit ratings saw their adjustable-rate mortgage payments skyrocket. Many couldn’t make the payments, resulting in a wave of defaults that sent the housing market reeling.

But Kan said lenders are now applying stricter credit standards, including evaluating the borrower's credit rating against the current mortgage rate, not just the introductory rate. Furthermore, ARM usage peaked at 35% in 2005, well above current levels.

“Most ARM loans now have fixed terms of 5, 7, and 10 years and borrowers are underwritten to the fully indexed rate and are significantly less risky than ARM loans originated before 2008,” Kan wrote. “Additionally, borrowers who qualify for ARMs tend to have better credit profiles.”

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Global fund managers are more bullish than they've been in years by many measures, according to a recent BofA suvery.

Key Takeaways

• Bank of America's Bull & Bear Indictor rose last week to within a tenth of a point from flashing "sell," a sign that high expectations and aggressive investor positioning could pressure stocks in the coming months.
• The indicator has sent two sell signals this year, but neither preceded a prolonged stock slump.

Professional money managers are feeling better about the stock market than they have in years. That may be cause for caution. 

The smart money is more bullish than at any time since July 2021, according to Bank of America’s December Global Fund Manager Survey, which showed optimism about the economic outlook at multi-year highs and cash levels at record lows. That may sound bullish—but the reading has pushed BofA’s "Bull & Bear Indicator" up to 7.9, a tenth of a point away from what the bank considers a "sell signal.”

Why is that? The indicator is premised on the idea that market returns are driven by positioning, profit, and policy. The best time to buy risk assets, according to BofA, is when investor positioning is extremely bearish, profit expectations are recessionary, and policymakers are stimulating the economy—and the best time to exit is when positioning is bullish, profits are expected to skyrocketed, and policy is tightening.

Why This Is Important

Investor sentiment is often a pivotal factor determining how the stock market responds to economic data, policy decisions, and corporate news. Excessive optimism can cause investors to overlook warning signs, while excessive pessimism can lead investors to overstate the significance of negative signals.

Positioning is extremely bullish today, according to BofA. Fund managers' cash levels were at a record-low 3.3% when the survey was conducted between Dec. 5 and 11. Investors are more overweight stocks and commodities—a reflection of risk appetite—than any point since February 2022.

Optimism about corporate profits is also running high. Nearly two-thirds of surveyed investors expect global earnings to increase over the next year, the largest share since August 2021. (A FactSet analysis estimates full-year 2025 earnings growth at above 12%, above the 10-year average.) Only 3% of those surveyed expect the global economy to fall into a recession over the next year. 

Policy, meanwhile, isn't looking too restrictive at present. Last week, a divided Federal Reserve cut interest rates for the third time this year, electing to support a weakening labor market despite signs inflation is sticking above its 2% target. Labor market data released Tuesday could bolster arguments to continue cutting rates early next year. The tax bill signed into law by President Donald Trump in July is also expected to boost economic growth next year.

The Bull & Bear Indicator has flashed “sell” 16 times since 2002. More often than not, the S&P 500 rises in the three months after a sell signal. But historically, pullbacks have been larger than advances, and the index posted an average three-month return of -1.4% during those 16 periods.

The indicator has sent two sell signals this year, in July and October. Both came about a month before stretches of exceptional volatility, but neither foretold a prolonged slump. The S&P 500 rose 7.5% in the three months that followed July’s signal. Since the alarm went off in October, the index is up about 1%. 

Some other sentiment measures are flashing some concern, but don't appear overly dramatic. CNN's Fear & Greed index was recently in a neutral range, less bearish than in recent weeks. And the weekly AAII survey of individual investor sentiment has lately tipped bullish or neutral after recovering from more downbeat readings last month. The VIX, Wall Street's "fear gauge," remains in a zone generally denoting calm.

Investors are increasingly concerned about the AI trade that’s defined the bull market of the past three years. Nearly 40% of investors said an AI bubble was the biggest risk facing markets next year. Nearly 20% said the biggest threat to stocks was a “disorderly rise in bond yields.” 

When asked what would be the most likely cause of distress in credit markets, nearly 30% of those surveyed said “AI hyperscaler capex,” the second-most common response. December’s survey marks the first time respondents have expressed any concern that AI spending could destabilize debt markets.

Investor concerns about big tech’s massive spending on AI infrastructure have been a headwind for tech stocks in recent months. The Roundhill Magnificent Seven ETF (MAGS) is down about 4% since hitting a record high in late October. On Monday, one-time darlings of the AI trade, Nvidia (NVDA) and Oracle (ORCL), were trading about 15% and 40% below their respective all-time highs. 

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Ford said its electric vehicle unit is expected be profitable by 2029 after making some changes

Key Takeaways

• Ford is pulling back on parts of its EV strategy as the automaker says it is looking to respond to consumer preferences.
• The automaker said it expects to take on about $19.5 billion in one-time charges as part of a restructuring.
  

Ford's (F) electric vehicle strategy is changing gear.

The automaker announced a major shift in its EV plans late Monday, with the company expecting to take on about $19.5 billion in one-time charges to account for the costs of a restructuring plan that will see the automaker focus more on hybrid and plug-in vehicles, while pulling away from pure EVs. Ford said it plans to recognize most of the $19.5 billion in charges during the fourth quarter, with about $5.5 billion in cash effects to be paid through 2027.

“This is a customer-driven shift to create a stronger, more resilient and more profitable Ford,” Ford CEO Jim Farley said in a statement. “The operating reality has changed, and we are redeploying capital into higher-return growth opportunities."

The next generation of Ford's F-150 Lightning electric truck will now be an extended-range EV rather than a fully electric vehicle. Ford said its plans to start introducing smaller, more efficient and affordable EVs remain on track for 2027.

Why This Is Significiant

Ford is the latest automaker to scale back parts of its electric vehicle plans, in what could underscore a broader trend as demand in the U.S. has fallen amid concerns about costs with the expiration of EV tax credits, and charging infrastructure, among other things.

Ford said its electric vehicle unit should be profitable by 2029 after making these changes, and that some of its battery-producing plants will shift to making stationary batteries for homes, businesses, and data centers.

General Motors (GM) and other automakers have made changes to their EV plans as well in recent months, anticipating a drop in demand after a $7,500 EV tax credit expired at the end of September. Automakers are also facing less pressure to shift to more sustainable vehicles, as the Trump administration has loosened emissions requirements.

Ford said it expects that by 2030, about half of its vehicle lineup will be made up of a combination of hybrids, EVs, or extended-range EVs, compared to about 17% of its lineup today.

Ford shares were little changed in recent trading. They have gained nearly 40% since the start of the year.

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Federal Reserve policy committee members, including Chair Jerome Powell, have been waiting for more up-to-date data on the labor market.

Key Takeaways

• The uptick in unemployment in November shows that the Federal Reserve was justified in cutting interest rates earlier in the year, economists said.
  
• The Fed is expected to pause its rate-cutting campaign in January to assess the impact of cuts so far, but the poor jobs report kept a January cut on the table.
  
• The Fed is cutting borrowing costs in hopes that easier money will boost spending and hiring.
  

An unexpected jump in the unemployment rate Tuesday kept pressure on the Federal Reserve to rescue the job market by cutting interest rates.

Fed officials—concerned about the health of the labor market and left with limited data to go on during the government shutdown—opted to cut the central bank's key interest rate last week for the third time in as many meetings.

Tuesday's jobs report kept those worries alive when it showed the unemployment rate rose to 4.6% in November from 4.4% in September, reaching a fresh high since 2021.

What This Means For The Economy

The faltering job market makes the Federal Reserve more likely to lower borrowing costs, which could boost the economy and potentially prevent a surge of unemployment.

Fed officials have been divided over how best to pursue the central bank's dual mandate from Congress to keep inflation low and employment high, at a time when the economy isn't cooperating with either objective.

One faction prefers to keep interest rates higher for longer to crush inflation that's still over the Fed's goal of a 2% annual rate. Another prefers faster rate cuts to prevent unemployment from rising severely. The federal funds rate influences borrowing costs on short-term loans, allowing the central bank to discourage spending with high, "restrictive" rates or encourage it with lower ones.

Weak Jobs Report Could Keep Rate Cut Hopes Alive

Tuesday's job market report gave ammunition to the rate cut advocates, although it didn't settle the debate.

The Fed will get another jobs report before its next meeting, as well as several reports on inflation, which could tip the balance one way or the other. The Fed may also take the data with a grain of salt, as the government shutdown in October and November interfered with the Bureau of Labor Statistics' ability to conduct the surveys used to compile the report.

As of Tuesday, financial markets were pricing in a 24% chance of a January cut, and a likelihood of one additional cut at some point in 2026, according to the CME Group's FedWatch tool, which forecasts rate movements based on fed funds futures trading data.

The details of the report, however, were mixed enough that some economists could argue that the job market is sufficiently resilient, suggesting there's no urgency for the Fed to rescue it with rate cuts.

"The private sector nonfarm employment readings for November and October signal that while net hiring remains soft and narrowly based, it is not softening further and in fact is moderately firmer than the weak readings in the summer,"  Kathy Bostjancic, chief economist at Nationwide, wrote in a commentary.

Delayed Data 'Justified' Fed's Past Cuts

Several economists said the report showed Fed officials were right to cut interest rates earlier in the year but that further cuts were not necessarily a done deal, at least not right away.

"Today’s data should be treated with some caution, but it shows a labor market drifting further away from full employment, meaning the Fed’s three rate cuts to end 2025 were well justified," Preston Caldwell, chief U.S. economist at Morningstar, wrote in a commentary. "

"If today’s data is confirmed by subsequent readings, we could see two or three rate cuts in the first half of 2026, rather than the single cut priced in by the market as of yesterday," he wrote. "On the other hand, we think it’s still very likely the Fed pauses in January, as it will take some time to see how the rate cuts at the end of 2025 impacted the economy."

In recent months, several Fed officials have voiced concerns that employers have curtailed hiring, at least partly because of uncertainty surrounding President Donald Trump's campaign to raise import taxes on nearly every U.S. trading partner.

"This report bolsters the way we have been thinking about the Fed’s current policy approach,"  Elyse Ausenbaugh, head of investment strategy at J.P. Morgan Wealth Management, wrote in a commentary. "The delivery of 'insurance' cuts over the past few months was prudent and brought rates to a more neutral level. One additional cut may be appropriate in the first quarter of 2026, but the economy looks stable enough to heed patience in taking additional action."

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For investors who have been unhappy with bitcoin’s recent returns, an actively-managed strategy could be appealing.

Key Takeaways

• The proposed Nicholas Bitcoin and Treasuries AfterDark ETF aims to bottle the overnight performance of the cryptocurrency in an investment vehicle.
• Some research supports the premise of the strategy, but it may not consistently deliver excess returns.

The early bird may get the worm. But does the night owl eat its lunch?

That question is at the core of a proposed exchange-traded fund from Nicholas Wealth called Bitcoin and Treasuries AfterDark. (Approval and launch under the ticker "NGHT" are expected next year.) The strategy aims to capture the performance of the world's largest cryptocurrency while U.S. stock markets are closed, on the belief that bitcoin's (BTCUSD) performance is better in the evenings.

"In a market like we're in now, a lot of the losses have [been] overnight," David Nicholas, president and founder of Nicholas Wealth, told Investopedia. "But in a bull market for bitcoin—that's actually when we see the biggest outperformance."

For investors who have been unhappy with the coin's not-so-hot returns lately, an actively managed strategy could be appealing, and there is some research that suggests bitcoin's overnight performance can exceed the day's. But other numbers suggest that the strategy isn't a slam dunk.

WHY IT MATTERS TO YOU

There's a joke in the ETF world that the arrival of a new strategy is a lagging indicator—meaning that by the time a particular investment approach is identified, and packaged for mass-market consumption, it's over or in the final stages of delivering any alpha.

One study that analyzed five-minute bitcoin price data from January 2018 to December 2023 found that average overnight returns were 0.093%, better than U.S. trading hour returns of -0.029%. (Crypto markets trade 24/7, with investors across geographies mostly trading during their waking hours.)

If bitcoin gains are bigger in the U.S.'s off hours, that would indicate meaningfully higher buying activity overseas. That hasn't been the case for most of the past year—suggesting that such a strategy may be unable to deliver excess returns consistently over long periods of time. Other ETFs in the same vein—those that aimed to deliver nighttime performance of stocks—closed roughly a year after launching, in large part because the strategy underperformed.

"If I just want to have Asia-hour exposure, that's cool," Greg Magadini, Director of Derivatives at Amberdata, said about the strategy. "But there shouldn't be any reason for it to outperform or underperform consistently. It's kind of just noise."

Paris-based blockchain analytics company Kaiko's data show that U.S. bitcoin trading session returns exceeded both APAC's and London's from January 2023 to December 2025. Trading volumes over the same time period, meanwhile, don't indicate that one region is steering the direction of bitcoin, though the U.S.'s share has touched historical highs in the past year, Kaiko research analyst Laurens Fraussen told Investopedia.

Still, Fraussen said, "there is no structural regime shift in which one region suddenly dominates global [bitcoin] trading volume."

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The unemployment rate rose to 4.6% in November, leaving many to look for jobs through job fairs.

Key Takeaways

• The U.S. economy lost 105,000 jobs in October and added 64,000 in November.
  
• The unemployment rate rose to 4.6% in November, higher than the 4.5% expected.
  
• The report, which was delayed by the government shutdown, showed that the job market's recent slump was deepening.
  

Job creation slowed and the unemployment rate rose this autumn, according to data that had been delayed by the government shutdown.

The U.S. economy lost 105,000 jobs in October and added 64,000 in November, the Bureau of Labor Statistics said Tuesday. The unemployment rate rose to 4.6% in November from 4.4% in September, reaching a fresh high since 2021.

November's job creation and the unemployment rate were both higher than forecasters expected, according to a survey of U.S. economists by Dow Jones Newswires and The Wall Street Journal.

"The final jobs report released in 2025 showed the labor market still struggling to maintain its footing," wrote Wells Fargo economists.

The report showed a continuation of the trends that began this summer: a sharp slowdown in hiring due to uncertainty among business leaders about tariff policy, as well as from President Donald Trump's crackdown on immigration.

October was the third month this year in which the economy lost jobs. Before June, U.S. employers had added jobs every month since the pandemic.

What This Means For The Economy

With job creation flatlining and the unemployment rate steadily rising, the labor market is becoming a weak point in the U.S. economy.

The report also highlighted the impact of deferred government layoffs made earlier in the year when President Donald Trump took office and began slashing federal programs and jobs, offering many of them deferred buyouts that took effect in October.

The bureau released only some of its usual monthly data for October. The survey of households used to calculate the unemployment rate, labor force participation rate, and other statistics was not conducted because of the government shutdown.

The disruptions caused some economists to take the report with a grain of salt, and officials at the Federal Reserve likely will too. The Fed has cut its key interest rate at its last three meetings to support the faltering job market. It could again at its next meeting in January if the hiring slump continues, although Tuesday's report may not be too influential in that decision.

"The Fed is unlikely to put much weight on today’s report given data disruptions," Kay Haigh, global co-head of fixed income and liquidity solutions at Goldman Sachs Asset Management, wrote in a commentary.

Where Are Those Jobs Coming From?

The bulk of the job creation in November came from health and education services, which added 65,000 jobs, and construction, which added 28,000. Health care and education have been the only real source of job growth in recent months, with employment declining in most other sectors.

That includes manufacturing, which lost 5,000 jobs in November and has lost jobs every month since May. The manufacturing decline is especially noteworthy because Trump's tariffs were intended to protect U.S. factories and boost manufacturing employment.

"Businesses are not hiring as they adjust to tariffs, [uncertain] conditions and AI," Heather Long, chief economist at Navy Federal Credit Union, wrote in a commentary. "The result is about 700,000 more unemployed Americans than there were a year ago. This is painful for many middle-class families who are losing income."

News of the day for Dec. 16, 2025

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The major stock indexes each declined on Monday as AI bubble concerns persist.

Stock futures are slightly lower this morning ahead of the release of highly anticipated labor market data; the government is scheduled to release two months of employment figures that were delayed owing to the government shutdown; Ford is roverhauling its electric vehicle business amid stagnant demand in the U.S.; Oracle and Broadcom are among the tech stocks looking to reverse their recent slides; and Tesla shares enter today's session at their highest level of the year. Here's what you need to know.

Stock Futures Slip Ahead of Critical Jobs Data

Stock futures are ticking lower as investors await the release of two months of employment data that will provide a clearer picture about the health of the U.S. economy. Futures tied to the tech-heavy Nasdaq were off 0.3% recently, while those linked to the S&P 500 and the Dow Jones Industrial Average slipped 0.1%. On Monday, the major indexes lost ground as concerns around an AI bubble continue to pressure the tech sector. Gold futures were down 0.4% at $4,320 an ounce this morning, after approaching a fresh record high yesterday, while crude oil futures fell 1.6% to $55.90 per barrel. Bitcoin was trading at $87,100, up from an overnight low of $85,200. The yield on the 10-year Treasury note, which affects the costs of all sorts of consumer loans, ticked lower to 4.17%.

Long-Delayed Employment Numbers Due This Morning

Investors will get a double dose of jobs data on, with the government shutdown-delayed figures from October slated for released alongside November numbers at 8:30 a.m. ET. Economists estimate that the October numbers will show a decline in employment owing to mass layoffs of government workers. November employment growth is expected to come in at about 50,000 jobs, a relatively modest increase that would confirm the slowdown in the labor market. The Federal Reserve last week cut its key interest rate for the third time this year, citing concerns about the labor market, and the data released today will factor into the Fed's thinking about future rate adjustments. As of Tuesday morning, the CME Group's FedWatch tracker assigns just a 24% chance of a rate cut at the Fed's Jan. 28 meeting.

Ford to Take $19.5B in Charges Amid EV Business Restructuring

Ford (F) has announced a major shift in its electric vehicle strategy, with the Michigan automaker expecting to take on about $19.5 billion in one-time charges to account for the costs of its restructuring plans. Ford and other automakers are scaling back electric vehicle plans as demand in the U.S. has fallen after the Trump administration ended the $7,500 EV tax credit earlier this year. In its late-Monday announcement, Ford said its electric vehicle unit should be profitable by 2029 after making these changes, and said some of its battery-producing plants will shift to making stationary batteries for homes, businesses and data centers. The next generation of the brand's F-150 Lightning will also now be an extended range EV rather than a fully electric vehicle, and Ford said its plans to start introducing smaller, more efficient and affordable EVs continues on track for 2027. Ford shares were up 1.5% in recent premarket trading.

Oracle, Broadcom Stocks Look to Recover From Post-Earnings Slides

Shares of several tech stocks are looking to recover this week after recent slides, especially Oracle (ORCL) and Broadcom (AVGO), which have each tumbled since reporting earnings last week. Analysts are largely staying bullish on the stocks, but investors worry about an AI bubble inflating valuations in the market. In the three trading sessions since last Wednesday, when Oracle reported results after the bell, shares of Oracle and Broadcom have each lost more than 15% of their value. Investors are concerned about a range of issues facing the AI trade, from questions over how companies such as Oracle and OpenAI will finance their massive expansion plans while remaining financially stable, to the sustainability of AI demand outside of the few biggest tech companies. Shares of Broadcom and Oracle were little changed ahead of the opening bell.

Tesla Shares Trading at Highest Level of 2025

Telsa shares come into today's session at their high point of the year and not far from an all-time high. The company is facing the same lackluster EV demand in the U.S. as other automakers, along with international sales that are being hampered by increasing competition from Chinese automakers. However, investors are increasingly focused on other aspects of Tesla's business, such as its self-driving software, robotaxis, and humanoid robots called Optimus. After piloting its robotaxi program in Austin, Texas in recent months with a Tesla employee in the passenger seat, the company has recently started testing the vehicles' ability to drive autonomously with no one in the car. Tesla shares—which closed yesterday at $475.31, just off the record closing high of $479.86 set last December—were down 0.5% in recent premarket trading.

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Micron shares have nearly tripled since the start of the year

Key Takeaways

• Micron Technology's fiscal first-quarter results are due for release after the market closes Wednesday, with analysts expecting growing sales and profits.
• Options pricing suggests traders expect Micron's stock could move up to 9% in either direction by the end of the week.
  

Micron Technology is set to report earnings after the market closes Wednesday, with traders expecting a big move in the memory chip maker's stock.

Options pricing suggests traders expect Micron (MU) shares could swing up to 9% in either direction by the end of the week. At the high end, a move of that size from Monday's close at $237.50 would push the stock above $258, near its all-time high reached last week. At the low end, however, the stock could slip to roughly $217, where it was late last month.

Micron, which makes memory components for leading AI chipmakers such as Nvidia (NVDA) and Advanced Micro Devices (AMD), has seen its sales surge to new highs this year on strong demand for its memory chips. Its stock has nearly tripled in value in 2025, making it one of the best-performing stocks in the S&P 500 for the year so far.

Why This Matters for Investors

Micron, as a memory supplier for some of the biggest AI chipmakers, is seen as a leading "pick-and-shovel" play for the AI trade. A strong earnings print this week and market reaction to the results would underscore its status as one of the year's biggest winners of the AI boom.

Wall Street analysts expect Micron to report a 48% year-over-year jump in revenue to a record $12.93 billion, while adjusted earnings per share are projected to more than double to $3.96 for the first quarter of fiscal 2026, according to estimates compiled by Visible Alpha.

Ahead of the company's report, several analysts offered bullish commentary and lifted their price targets for the stock, expecting growing AI demand, a tightening memory market, and stronger pricing to support higher profits for Micron. Earlier this month, Micron said it plans to exit the consumer memory products market after February 2026 in order to concentrate on more profitable AI-focused products.

Among the 11 analysts with current ratings tracked by Visible Alpha, nine call the stock a "buy," compared to two "hold" ratings. Their mean target near $249 would suggest about 5% upside from Monday's close.

Take A Number: A Striking Figure In Economic News Today

Elizabeth Guevara / Investopedia

Key Takeaways

• The U.S. economy likely lost an average of 20,000 jobs per month between April and September, rather than the reported average gain of 43,000 jobs per month, Federal Reserve Chair Jerome Powell said.
  
• A downward revision of job growth would be yet another red flag about the health of the labor market.
  

The job market, already thought to be slowing down, may be in even worse shape than it seemed at first.

The U.S. economy likely gained an average of around 60,000 fewer jobs each month than previously reported between April and September, Federal Reserve Chair Jerome Powell said at a press conference last week.

Currently, the Bureau of Labor Statistics reports that the economy gained 119,000 jobs in September, the most recent data available on the labor market. However, if Powell's estimate is correct, the actual number was about half that. Moreover, the economy may have actually lost an average of 20,000 jobs each month since April instead of gaining about 40,000 as previously reported.

Why This Matters

A weaker labor market can pressure wages, consumer spending, and confidence, shaping expectations for future Fed rate cuts.

Powell did not cite a source for his figures, but the Fed has a staff of economists who carry out economic research to inform the central bank's policy decisions.

If Powell's comments are correct, the lower figures could come to light next year when the bureau carries out its annual revision of the previous year's job creation statistics to incorporate data that wasn't available when the monthly reports are published. It would be the latest in a series of red flags about the labor market, which is being slowed by tariff-related uncertainty and President Donald Trump's immigration crackdown, among other factors.

"I think you can say that the labor market has continued to cool gradually, maybe just a touch more gradually than we thought," Powell said.

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Bank of America expects the S&P 500 to rise a modest 4% over the next year.

Key Takeaways

• Bank of America's lead U.S. equity strategist predicted the S&P 500 would end next year around 7,100, just 4% above its level on Monday.
• Earnings growth is expected to remain strong, but softness in mega-cap tech stocks and less liquidity could be a drag on stocks. BofA's forecast is among the most bearish on Wall Street.

The stock market defied expectations again this year. One Wall Street analyst is telling investors not to expect it to happen in 2026.

“Our year-end target is pretty lackluster,” said Savita Subramanian, Head of U.S. Equity and Quantitative Strategy at Bank of America, on CNBC Monday. Subramanian's team predicts the S&P 500 will finish next year at 7100, just 4% above today's close—a pessimistic forecast by Street standards.

The S&P 500 has gained about 16% so far this year, putting the benchmark index on track to post its third straight year of double-digit gains. Like last year, strength in tech shares, and those of other companies exposed to the AI boom, has been the driving force behind this year's gains.

Why This Is Important

Analysts are generally optimistic about the stock market heading into 2026, with even the most cautious experts forecasting a slightly positive year. Still, some experts are predicting a bumpy path to gains, and Bank of America is looking for things to finish far cooler than they appear on track to end 2025.

Subramanian expects earnings to grow at a healthy clip next year, a reflection of a surprisingly resilient economy that's weathered soaring inflation, elevated interest rates, and an unpredictable global trade war. But Subramanian predicts multiples will contract next year as investors' growth expectations moderate. 

The run-up in AI stocks may become a headwind next year. The high valuations of mega- and large-cap tech stocks is one of the reasons Vanguard recently forecast the S&P 500 would average mid-single-digit returns over the next decade or so.

Subramanian on Monday said "buy-the-dream" AI stocks are “maybe headed for a little bit of an air pocket.” The AI trade has been pressured recently by concerns that tech companies are spending too much on a technology with uncertain commercial potential. Subramanian acknowledged similarities between today’s market and the Dotcom Bubble of the 1990s, but noted that several factors, including tech's strong earnings, make today's setup less risky. 

Less liquidity could also keep a lid on the stock market next year, said Subramanian. “Everything looks really good right now from a liquidity perspective, from a Fed perspective,” she said. "Economic data is still relatively healthy. But when you think about liquidity over the next 12 months, it’s getting worse rather than better.”

Global central banks are expected to cut interest rates 78 times next year, after cutting 139 times this year, according to Bank of America analyst Michael Hartnett. Fewer cuts means less capital flowing into equities and supporting prices. 

Some bulls expect the good times to continue. Oppenheimer analysts earlier this month predicted that the S&P 500 would finish next year at 8100, suggesting about 19% upside from today's finish. "We expect markets to continue the bull market rally that began in Oct. 2022 as economic fundamentals remain supportive of continued revenue and earnings growth,” wrote Chief Investment Strategist John Stoltzfus on Sunday.