2025-12-23: Wall Street Futures Slip Amid Mixed Economic Data, Reverses During Trading

On December 23, 2025, at approximately 8:45 AM EST, Proactive Investors [1] reported a ~0.2% decline in S&P 500, Nasdaq 100, and Dow futures, following a three-day winning streak. This dip was triggered by the release of mixed economic data, including a stronger-than-expected third-quarter GDP reading (4.3% annualized, exceeding the 3.2% consensus estimate) driven by robust consumer spending (3.5%, the strongest since late 2024) [4][5], alongside an increase in the Fed’s preferred inflation gauge, core PCE, to 2.9% (up from 2.6% in Q2) [3].

Traders responded by paring back expectations for a January 2026 rate cut, with odds dropping from 18% to 13% per the CME FedWatch Tool [2]. However, the market reversed course during regular trading hours, with major indices closing higher (S&P 500 +0.54%, Nasdaq Composite +0.66%, Dow Jones Industrial Average +0.25%) [0]. This recovery reflects investor confidence in the “soft landing” narrative—strong economic growth alongside gradual inflation cooling—despite the mixed data. A critical context is that the Q3 GDP report was delayed by a 43-day government shutdown, meaning it reflects economic conditions from July-September 2025, which are somewhat outdated as the fourth quarter concludes [5].

1. Short-Term Sentiment vs. Broader Narrative
   : The initial futures dip (driven by rate cut expectation adjustments) vs. the subsequent market recovery highlights how short-term data reactions can be overshadowed by persistent investor confidence in a favorable macroeconomic “soft landing” scenario.
2. Outdated Data Impact
   : The delayed GDP release (due to government shutdown) likely reduced its influence on long-term market sentiment, with investors possibly prioritizing more recent (though unavailable) indicators over July-September 2025 data.
3. Balanced Rate Cut Expectations
   : While January 2026 rate cut odds fell, traders still priced in two 25-basis-point cuts by the end of 2026 [2], reflecting ongoing concerns about a cooling labor market (4.6% unemployment, the highest since 2021 [3]) despite strong GDP growth.
4. Holiday Trading Dynamics
   : The market’s recovery occurred amid thin holiday trading conditions (markets closed early on Christmas Eve and shut on Christmas Day [2]), which can amplify price moves but in this case did not derail the soft landing narrative.

• Inflation Persistence
  : Core PCE inflation remains above the Fed’s 2% target, which could lead the Fed to pause or slow rate cuts in 2026, putting downward pressure on equity markets [3].
• Thin Holiday Trading
  : Reduced liquidity during the holiday period could amplify future price volatility [2].
• Labor Market Uncertainty
  : While the unemployment rate rose to 4.6% [3], detailed data on November job gains/losses and wage growth (missing from available analyses) is needed to fully assess labor market health, which is a key factor for Fed policy.

• Soft Landing Resilience
  : The market’s recovery indicates ongoing investor confidence in the soft landing scenario, which could support equity markets if growth remains strong and inflation gradually cools.
• Gradual Rate Cuts
  : The two rate cuts priced into futures by end-2026 [2] may provide a buffer for economic activity and market sentiment.

• Event Date
  : December 23, 2025, 8:45 AM EST (futures dip); regular trading recovery later that day.
• Key Economic Data
  : Q3 GDP (4.3% vs. 3.2% estimate), core PCE (2.9%).
• Rate Cut Expectations
  : January 2026 odds down from 18% to 13%; two cuts priced in by end-2026.
• Market Outcome
  : Major indices closed higher (S&P 500 +0.54%, Nasdaq +0.66%, Dow +0.25%).
• Context
  : Delayed GDP report (43-day government shutdown), thin holiday trading, “soft landing” narrative remains dominant.

This summary provides objective market context and analytical findings without prescriptive investment recommendations.