Murphy's Market Minute | December 19, 2025

This week delivered a heavy slate of economic data, highlighted by key employment and inflation reports. The November employment report came in above expectations, with the U.S. economy adding 64,000 jobs. While this was a positive surprise, it continues to reflect a broader slowdown in hiring. The unemployment rate rose to 4.6%, its highest level since September 2021, while wage growth softened, with average hourly earnings increasing just 0.1%, below expectations. Additional labor data released Thursday showed initial jobless claims of 224,000, in line with forecasts, reinforcing the view of a cooling—but still stable—labor market. Inflation data was the main market driver this week. Headline CPI fell to 2.7% and core CPI declined to 2.6%, its lowest level since early 2021. Part of this drop reflects a temporary data issue caused by the government shutdown, which delayed the collection of some housing prices and made inflation appear cooler than it truly is. Even so, the overall trend remains favorable, supporting stocks and giving the Federal Reserve more flexibility later this year if inflation continues to ease. Despite easing inflation and a modest rise in unemployment, markets are not expecting a near-term rate cut. According to the CME Group’s FedWatch Tool, the probability of a rate cut at the Fed’s January meeting currently stands at 19.9%. Markets are extending Thursday’s rally into Friday, though stocks remain roughly flat on the week, as early-week weakness offset recent gains.