Morning Market Snapshot – Friday, December 12, 2025
Pre-market is split, and the split is cleanly thematic. Value and cyclicals have momentum after Thursday’s record closes, while the AI complex is wobbling again on profitability anxiety.
Index futures reflect that tug-of-war. Dow futures were up about 0.10% at 48,795, while S&P 500 futures were down about 0.22% at 6,891.75, and Nasdaq 100 futures were down about 0.64% at 25,548 around 7:01 AM ET.
The immediate catalyst is Broadcom. Broadcom fell about 5% premarket after flagging lower future margins for AI system sales, even as it reported substantial quarterly revenue. That margin framing matters because it hits the market’s soft underbelly: investors have accepted mainly that AI demand is real, but they are still debating who captures the economics and when.
Macro feels supportive but not frictionless. The Fed cut rates this week, and investors liked the tone, which helped drive a rotation that lifted the Dow and small caps. On Thursday, the Dow rose 1.34% to 48,704.01, and the S&P 500 gained 0.21% to 6,901.00, both record closes, while the Nasdaq slipped 0.25% to 23,593.86. The market’s message was not “risk-off.” It was “re-price leadership.”
Rates are not sending a panic signal this morning. The U.S. 10-year yield was around 4.17% (up about 1 bp on the session). Commodities are doing their own thing, with real strength in precious metals. Gold futures were up about 1.27% to 4,334, and silver futures were up about 1.34% to 64.45, while WTI was slightly lower around 57.52.
What to focus on into the open is simple: whether the market treats the AI wobble as a contained “valuation and margin” episode, or as the start of broader de-risking. Watch semis, megacap tech breadth, and whether financials and materials keep absorbing flows like they did on Thursday. Materials gained 2.2% and financials gained 1.8% in Thursday’s session. If rotation holds, the tape can stay constructive even with Nasdaq softness.
Pre-Market News Catalysts
- Broadcom (AVGO): down ~5% premarket on commentary pointing to lower future margins on AI system sales, reviving “AI profitability” fears.
- Oracle (ORCL): down ~1% premarket after a sharp prior-session drop tied to a weaker outlook, with investors also watching heavy AI spending and financing concerns.
- Lululemon (LULU): up ~10% premarket after news that CEO Calvin McDonald is leaving and the company raised its annual profit forecast.
- Tilray (TLRY): up ~30% premarket on a report that President Donald Trump is looking to cut restrictions on marijuana via a planned order, lifting the group.
The Day’s Debate Bears Vs. Bulls
The Bull Case: The bullish read is that this is a healthy leadership change, not a market top. Thursday’s tape showed the market can advance even when parts of tech sag, and that matters for durability. The Dow and S&P 500 printed record closes on Thursday while the Nasdaq dipped, a classic rotation footprint. Bulls will argue that broadening is what you want late in the year when positioning is crowded.
The Fed backdrop is also doing quiet work. Reuters reported the Fed cut borrowing costs by 25 basis points, and investors were relieved the guidance was less hawkish than feared. Even if Chair Powell signaled caution on additional easing, the mere fact that easing is happening can shift the opportunity set toward cyclicals, small caps, and rate-sensitive value.
That is visible in sector performance. Materials and financials led Thursday, and the S&P 500 value index outperformed the growth index. Bulls will say that flow is rational, not fearful.
There is also a pragmatic AI bull angle: the market is moving from hype to economics. Kyle Rodda at Capital.com said investors are positioning for the next stage of the AI revolution, where end users begin to employ the technology and capture productivity gains. That framing suggests today’s AI weakness is part of price discovery, not a demand collapse.
The Bear Case: The bearish read is that the market is finally asking the question it avoided for much of 2025: who pays for AI, and who profits from it. Broadcom’s premarket drop is not about demand fading. It is about margins and the risk that AI infrastructure becomes a volume business with less pricing power than investors assumed. AVGO fell about 5% premarket after warning that future margins will be lower due to AI system sales.
Oracle is the second flashpoint because it blends AI ambition with balance-sheet sensitivity. Reuters noted Oracle’s quarterly forecasts missed estimates and that the cost of insuring Oracle debt against default surged, feeding “AI bubble” comparisons to the dotcom era. If credit starts to price stress in AI spenders, equity multiples tend to compress quickly.
The bear also points to correlated weakness in the complex. Reuters reported that AMD and Nvidia were down about 1.2% and 0.8% premarket, respectively, alongside a broader dip in Nasdaq futures. That is the risk when a narrative goes from “growth” to “profitability” overnight.
Finally, bears will warn that the market may be overconfident about the easing path. Reuters said traders are pricing about 50 bps of cuts by end-2026, more than the Fed has signaled. If officials push back in today’s speeches, the combination of “rates not as easy as hoped” plus “AI margins under pressure” is an uncomfortable mix for a market sitting near highs.
The Strategic Takeaway
Treat today as a leadership stress test, not an index-level verdict.
If you see Nasdaq weakness but Dow stability, it likely means the market is continuing the same rotation we saw on Thursday, where capital moves from high-duration growth into value and cyclicals. Dow futures were modestly higher, while Nasdaq 100 futures were notably lower premarket. In that world, the opportunity is in relative strength and breadth, not in chasing the loudest headline.
If, instead, semis drag the whole tape and defensive bids show up at the same time, then the market is telling you the AI profitability question is turning into a risk budget cut. Broadcom’s margin commentary is the current spark for those concerns.
Also, keep an ear on Fed speakers. Reuters highlighted remarks expected from Philadelphia Fed President Anna Paulson, Cleveland Fed President Beth Hammack, and Chicago Fed President Austan Goolsbee later Friday. If they validate the market’s easing expectations, rotation can stay orderly. If they push back, tech leadership can wobble harder.
Upcoming Session Outlook with Directional Bias
The opening tone looks like “digest and rotate,” not “panic,” but the Nasdaq is walking on a thin layer of ice.
Futures say the market wants to keep the broader uptrend intact while de-risking crowded tech exposures. S&P 500 futures were down about 0.22% with Dow futures up about 0.10%. That is consistent with Thursday’s pattern, where the index advanced on a shift in leadership. Value beat growth and small caps outperformed, according to Reuters.
The key is whether the AI margin narrative stays company-specific. AVGO’s margin warning and ORCL’s post-update anxiety are the center of gravity this morning. If credit spreads and megacap breadth remain calm, dips in semis can coexist with strength in financials, materials, and other cyclicals.
With precious metals strong and oil soft, cross-asset signals are mixed, not screaming recession or overheating. Gold futures were up about 1.27% while WTI was slightly down.
Directional bias into the open: Slightly Bearish for Nasdaq, Neutral-to-Slightly Bullish for the broader market.
Disclaimer: This article is for informational purposes only and does not constitute financial, investment, or legal advice. The information provided is a synthesis of publicly available data and expert analysis and should not be considered a recommendation to buy or sell any security. Investing in the stock market involves risk, including the possible loss of principal. Past performance is not indicative of future results. Readers should consult with a qualified financial advisor to determine an investment strategy that is suitable for their own personal financial situation and risk tolerance.
8. Sources
- Nasdaq, S&P 500 futures slip as Broadcom outlook reignites AI bubble fears | Reuters
- Premarket | Futures | Pre-market Trading | Markets Insider
- US 10 Year Treasury Note Yield – Quote – Chart – Historical Data – News
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