US markets are rising despite weak employment data, Nvidia's talk of possible export restrictions, and the Treasury Department's announcement of long-term tariffs. Investors are interpreting negative macro data as a signal of an imminent Fed rate cut, lowering the cost of capital and spurring a rally in stocks.
At the same time, geopolitical uncertainty surrounding chipmaking and global trade remains, a factor fueling volatility in December.

Weak employment data turns into growth driver again

US markets continue to move according to the classic principle: the worse the macro indicators, the higher the hopes for Fed easing. New data from ADP showed a 32,000-job loss in November—significantly below not only the previous month but also the consensus growth forecast. From an economic perspective, this is a worrying sign. From a market perspective, it signals a possible rate cut.

All three key indices rose, with the Dow Jones up 0.86% to lead the session. This reflects expectations that a deteriorating labor market will force the Federal Reserve to accelerate its rate-cutting cycle. European markets also posted cautious gains, with the Stoxx 600 up 0.1%, reflecting global risk appetite.
This is typical December logic for markets. With rates high, a deterioration in economic dynamics is interpreted as an easing of monetary conditions—even if the data itself signals a slowdown in growth.
This disconnect between economic reality and index performance is not unique; it recurs during periods of high uncertainty.

Huang-Trump meeting heightens tensions in chip sector

Nvidia CEO Jensen Huang said he discussed export restrictions on advanced chips with President Donald Trump. With lawmakers already considering new barriers to AI equipment supplies to China, the CEO's statement heightened concerns.

Nvidia is a key market player, and any tightening of exports affects three levels at once: global supply chains, the ability of Chinese companies to expand AI capacity, and the stability of Nvidia itself, which is significantly dependent on demand in Asia. Investors perceive this issue as a source of medium-term uncertainty. 

The situation is reminiscent of 2018–2020, when any White House statement on semiconductors would change market sentiment within hours. The difference is that the stakes are significantly higher now: AI chips have become the foundation of the entire technological infrastructure.

Economic Slowdown: A Worry Signal or a Gift for Markets

The ADP data has become an indicator of a weakening labor market, and this is no longer an exception, but a trend. The pace of job losses is accelerating, and the recent downgrade of the Dow Jones forecast suggests that analysts underestimated the market's weakness. Under normal circumstances, such statistics would have been a blow to the markets. But now investors are looking for reasons to reconsider monetary policy.
The gap between expectations and reality is widening. Amid slowing hiring dynamics, it can be assumed that corporate labor costs are also declining, meaning companies are temporarily seeing improved margins. This acts as a compensating factor for stocks. 
At the same time, the debt market continues to signal expectations of rate cuts in the first half of next year. For traders, this means speculative strategies based on dollar and index volatility are becoming increasingly attractive.

Tariffs: A Long-Term Risk for Global Trade

Treasury Secretary Scott Bessent stated that the administration would be able to implement tariff policy regardless of the Supreme Court's ruling, emphasizing that the tariffs would be imposed "permanently." This assertion heightens uncertainty over the next several quarters.
Tariffs create a knock-on effect. They raise import costs, increase companies' expenses, and can slow the economy—an effect that primarily affects the industrial and retail sectors. At the same time, this can increase the localization of production, which has been a key goal of US trade policy for several years.

For markets, the tariff agenda remains less important in the short term than rates and employment. But strategically, it creates pressure on consumer inflation—a factor the Fed inevitably takes into account.

Why is all this happening at once: The December effect

In December, markets typically become more sensitive to news directly related to monetary policy. Participants close positions, take profits, reload portfolios, and prepare for the first meetings of the new year. During this period, even small deviations in data are perceived as signals.
Weak ADP data, risks in the chip sector, and tariff discussions form a triple source of volatility. However, rates remain the key driver: the market is set up so that any weakness confirms expectations of easing. This explains why the Dow is rising on data that would have triggered a sell-off a year ago.

Investors live in a world of "signal inversion"

British economist John Hicks wrote, "Markets are moved faster by expectations than by facts." This phrase accurately describes the current situation. Negative data becomes a positive for the market, political risks to supply chains become mere noise, and tariffs become a deferred problem that investors are willing to ignore in favor of cheap money.
Strategically, such periods always end with a transition to a calmer regime. But as December moves forward, the "bad data is good news" logic remains dominant.

By Claire Whitmore 
December 04, 2025

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