December 12, 2025 US Stock Pre-Market Observation: Bullish Index, Bearish Market Conditions, Divergence Continues to Widen

1｜Surface is Bull Market, Feeling Like a Bear Market
Last night, US stocks continued to diverge: the S&P 500 and Dow hit new highs again, but the Nasdaq declined contrary to expectations due to AI tech stocks dragging the index down.
The index looks lively, but if you're fully invested in tech, you know the pain of “index up, I’m down.”
Small caps (Russell 2000) continued to outperform, with funds clearly flowing out of tech giants.
2｜Rate Cut Bull vs. AI Bubble Worries Clash
Currently, it's a typical environment of rate cut expectations + liquidity warming + weak dollar.
But on the other hand, AI trading is overly crowded, and bubble concerns are rising.
Funds are flowing from the Big Seven into value stocks and small/mid caps, representing a healthier rotation between high and low, which isn't a bad thing.
3｜Traditional Industries Rise, Bank Stocks Shine
Financial, healthcare, and industrial sectors within the Dow generally gained strength.
No economic collapse + stable yield spread expectations, banks like Goldman Sachs performed well, signaling a typical “cyclical sectors are passing the baton.”
4｜VIX Cools Down Sharply
Tech stocks are volatile, but VIX has fallen nearly 6% to 14.9.
Institutions aren't panicking; they’re just adjusting positions and hedging, with market sentiment leaning optimistic or even complacent.
This usually means: short-term stability, but it could hide major volatility ahead.
5｜Initial Jobless Claims Surge, But Narrative Unchanged
Initial claims jumped by 44,000 to 236,000.
The market attributes this mainly to seasonal factors (Thanksgiving/Christmas employment shifts) and doesn't believe the labor market is crashing suddenly.
But—if it continues to worsen next week, the soft landing story might fall apart.
6｜September Trade Deficit Hits 2020 Low
Deficit of $52.8 billion, an improvement of 10.9% YoY.
Exports +3%, imports only +0.6%, with pharmaceuticals and industrial goods contributing most.
This positively impacts Q3 GDP, indicating economic resilience and no signs of hard landing.
7｜Rates and Dollar Continue to Be “Stable with a Dovish Tilt”
10-year yield remains at 4.16%, dollar index drops to 98.4 (multi-month low).
Markets still expect at least two rate cuts in 2026, which is more dovish than the Fed’s dot plot.
This expectation gap is a source of future volatility.
8｜Semiconductors Enter “Perfection-Only” Stage
After Oracle's 14% plunge, Broadcom opened high but closed lower last night.
Nvidia pulled back, and the semiconductor sector is experiencing profit-taking after crowded trading.
Good news is already priced in,
Any minor flaws now will be punished—
Deflating the bubble could actually be healthy.
9｜Market No Longer Wants Stories, Only ROI
Storytelling about burning cash is increasingly ignored.
Disney’s licensing of IP to OpenAI’s Sora rose 2% against the trend.
AI funding sentiment might be shifting:
From “selling shovels” (infrastructure) → to “selling gold mines” (IP, applications).