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The Dow Jones Industrial Average (DJI) stumbled out of the blocks in December, falling 200 points and chalking in a soft technical barrier at the 47,600 level. December is historically a strong month for equity markets, but traders are facing a collection of sentiment headwinds as they wrap up the 2025 trading year following a volatile November.

Seasonality favors equity markets, with December often a strong month for stocks. However, the Dow Jones is coming off a strong seven-month winning streak, including an almost-flat 0.2% gain in November. The rubber band may be too stretched to allow another leg higher without gassing off some pressure.

AI trade faces fresh headwinds

AI names continue to grapple with market concerns of over-stretched valuations. Tech rally darling Nvidia (NVDA) and silicon-design firm Synopsis (SNPS) both popped around 1% on Monday after Nvidia announced another supply-side circular investment scheme into Synopsis. Other names in the AI game, including Broadcom (AVGO) and Super Micro Computer (SMCI), both stumbled around 2% as profit-taking flows grip the outer edges of the AI scene.

Bitcoin catches another broadside

Crypto markets caught a fresh hit on Monday, with Bitcoin (BTC) declining by over 5%. Bitcoin has once again fallen below 90,000, stumbling into the 85,000 region and putting the marquee cryptocurrency on pace for a third straight month of inflationary declines in December. BTC tumbled 17.5% in November after falling nearly 4% in October.

Fed rate cuts are coming... eventually?

Federal Reserve (Fed) interest rate cut expectations are spreading into a messy pool heading into the tail end of the year. Rate markets are still pricing in nearly 90% odds of a third straight interest rate cut on December 10. However, rate traders are also pricing in 88% odds that the Fed will hold off in December and deliver a quarter-point rate trim in January.

Dow Jones daily chart

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