(These are market notes from CNBC senior market commentator Mike Santori on today’s moves.) The market remains caught in the contradictory currents of AI anxiety and economic enthusiasm. On Friday, the AI pressure proved to be a little too heavy to fully absorb the economically sensitive parts of the market, leaving the S&P 500 with modest losses for the week. Beneath the surface, there is still a cyclical turn, with value outpacing growth, the equally weighted S&P 500 declining less than the major indexes, and bank stocks holding up pretty well. But despite the tape’s resilience, with the S&P 500 hitting a new six-week high by a few points on Thursday, the chart appears to be in a bit of a deadlock. The index fell on Friday to levels first reached on October 24th. Even if the index falls below 6,900, the upward trend is certainly maintained. As shown, and as is often the case, the lower end of the breakout range intersects the 50-day moving average about 1% below here. The Nasdaq 100’s advantage over the median stock price peaked around Election Day, as the withdrawal from the high-cost, big-AI strategies that boosted the index for six months has continued for more than a month. Broader concerns about the pace of AI investment, the huge capital needed for data centers, the shifting dominance of model developers, and questions about aggressive debt financing have been exacerbated in recent days by the Oracle and Broadcom results, but neither company has so far been able to reassure investors that the ramp-up is well thought out and on track. This reversal of leadership is likely welcome for many investors who believed the market was too concentrated in Magnificent 7-type stocks. But just yesterday I made the following cautious observation: “As I always point out, the broader market is neither a safer nor a more stable market. A rotation out of Mag 7, representing a total of 35% of the S&P 500, can grow chaotically without much warning. And leadership by the old economy sector is not a safe or more stable market. Friday’s upsets do not yet signal anything alarming in terms of market stress. For now, the rotation remains somewhat unstable. Those who watch seasonal patterns will also note that it is not unusual for stocks to be weak in the first half of December, even in years where the index continues to rise toward the end of the year. The U.S. Treasury market continues to appreciate in response to the Federal Reserve’s quarter-point interest rate cut, commitments to buy short-term debt to stabilize money markets, and some dovish comments about the interplay between economic growth, productivity, and interest rates in 2026. The yield on the 10-year bond is over 4.19%, the highest level in about three months. Although it is still below the level (about 4.5%) that has roiled the stock market in recent years, it certainly conveys hope that economic growth may accelerate. Next week, some delayed and significant economic data will be released, which will bring down the pre-holiday trading environment in late December. Given the Fed’s divided views and the active debate among economists about how to weight macroeconomic risks, there is a good chance that some will change their minds once the November jobs report and CPI are released. Bitcoin continues to trade heavily and appears to be hurting after the flash liquidation event two months ago. This continues to keep active retail traders’ risk appetite in check, at least compared to the frenetic behavior of late summer and early fall. Robinhood stock is down nearly 9% this week and is 20% below its all-time high (though it’s still tripled so far this year). More broadly, investors are in a fairly optimistic mood. Bank of America’s Bull and Bear Indicator recently entered the “extreme bullish” zone. This matched some pretty great tactical market tops in recent years. Although not perfect, the results were similar in December 2020, with the market continuing to rise led by speculative and risky stocks, which reached peak buying in the first few weeks of the year.
