Stocks Trade Mixed as Soft Industrial Data Offsets Strong Housing Figures
Please note that we are not authorised to provide any investment advice. The content on this page is for information purposes only.
U.S. equity markets showed little net direction on Wednesday after a batch of economic reports painted a nuanced picture of the economy’s health heading into the final weeks of 2025.
November industrial production rose a disappointing 0.1% from the prior month, well below the 0.3% increase economists had anticipated. Manufacturing output was essentially flat when excluding autos, highlighting persistent weakness in factory activity amid high interest rates and cautious business investment. Capacity utilization ticked lower to 78.2%, signaling ample slack in the sector.
“The manufacturing recession isn’t over yet,” said Oren Klachkin, U.S. economist at Nationwide. “Trade uncertainty and elevated borrowing costs are keeping capital expenditure plans on hold for many firms.”
In contrast, housing data provided a welcome counterbalance. Housing starts surged 4.2% to an annualized rate of 1.42 million units, beating expectations and marking the strongest pace in months. Building permits also edged higher, suggesting builders remain confident despite earlier rate pressures.
“The residential sector is benefiting from improved affordability as mortgage rates have moderated,” noted Robert Dietz, chief economist at the National Association of Home Builders. “Pent-up demand is finally starting to materialize.”
Major indices reflected the mixed signals. The Dow Jones Industrial Average declined 0.5%, dragged lower by industrial giants like Caterpillar and Boeing. The S&P 500 finished essentially flat, while the Nasdaq Composite gained 0.4% as investors rotated back into growth-oriented technology names. Small-cap stocks, which had rallied sharply earlier in the week, pulled back modestly.
Bond markets rallied on the softer industrial print, with the 10-year Treasury yield dipping to 4.34%. Fixed-income traders slightly increased bets on Federal Reserve rate cuts in early 2026, though the overall path remains gradual.
Corporate earnings chatter was subdued, but several industrial companies issued tempered guidance for next year, citing supply chain and policy risks. Homebuilders’ stocks outperformed, extending recent gains.
European equities closed lower after similar manufacturing weakness emerged from regional surveys. Asian markets were mixed overnight, with exporters under pressure from a stronger yen.
Looking ahead, Thursday’s Philadelphia Fed manufacturing index and initial jobless claims will offer further insight into near-term momentum. The data flow this week has largely reinforced the soft-landing scenario but underscored sector divergences.
For investors, the environment continues to favor quality and selectivity. Many portfolio managers are maintaining overweight positions in technology and healthcare while remaining underweight traditional cyclicals. As holiday liquidity thins, technical factors could dominate short-term moves.
Overall, markets appear content to grind higher gradually, supported by resilient consumer spending and expectations of pro-growth policies in the new year.
