Mid-Session US Market Analysis: Dec 12, 2025 – AI Selloff, Cannabis Surge, Fed Policy Split

This analysis is based on intraday market data [0] and external sources [1], [2], [3], [4], covering the morning session (through 12:00 EST) on December 12, 2025. Major indices declined sharply: the S&P 500 fell 1.05%, the Nasdaq Composite dropped 1.51%, and the Dow Jones Industrial Average declined 0.67% [0]. Sector performance was polarized: Basic Materials (+0.99%) and Communication Services (+0.08%) led gains, while Utilities (-3.57%), Energy (-2.81%), and Technology (-1.65%) lagged [0]. Technical levels showed the S&P 500 with resistance ~6,900 and support ~6,800, and the Nasdaq with resistance ~23,555 and support ~23,100 [0].

Key catalysts drove the session:

1. AI Sector Selloff
   : Broadcom (AVGO) warned of margin dilution from AI system sales and delayed delivery of a fifth customer order (rumored OpenAI) to 2026–2029 [1][4]. Bloomberg also reported Oracle’s (ORCL) OpenAI data centers were delayed to 2028, dampening AI growth sentiment [1]. NVIDIA (NVDA), AVGO, and ORCL posted intraday losses [1].
2. Cannabis Stock Surge
   : Multiple outlets reported Trump’s potential executive order to reclassify marijuana from Schedule I to Schedule III [2], leading to surges in Canopy Growth (CGC +30%), Tilray (TLRY +28%), Aurora Cannabis (ACB +12%), and YCBD (+77%) [2].
3. Fed Policy Split
   : Cleveland Fed President Beth Hammack advocated for tighter policy amid inflation [3], while Chicago Fed President Austan Goolsbe projected more 2026 rate cuts, creating policy uncertainty [3].

1. AI Sector Dichotomy
   : Near-term execution delays (delivery, data centers) caused the selloff, but long-term fundamentals remain strong, as evidenced by AVGO’s $73B 18-month AI backlog [4].
2. Regulatory Rumor Volatility
   : A single unconfirmed reclassification rumor led to extreme cannabis sector surges, highlighting the industry’s sensitivity to policy changes [2].
3. Fed Split Impacts Rate-Sensitive Sectors
   : Conflicting policy statements amplified rate uncertainty, pressuring rate-sensitive sectors like Utilities and Energy [3][0].

• Risks
  :
  • AI sector selling pressure may persist if near-term concerns overshadow long-term backlog strength [0][4].
  • Cannabis stocks face volatility and potential selloffs if reclassification rumors are not confirmed [2].
  • Fed commentary could further sway rate expectations, impacting rate-sensitive sectors [3].
• Opportunities
  :
  • Dip-buying potential in AI stocks with strong long-term backlogs (e.g., AVGO [4]).
  • Cannabis sector growth opportunities if reclassification is formalized, enabling tax benefits and reduced stigma [2].

• Major indices declined mid-session, with the Nasdaq underperforming due to AI sector weakness [0].
• AI selloff driven by AVGO’s margin warnings and ORCL’s data center delays; NVDA, AVGO, ORCL posted losses [1][4].
• Cannabis stocks surged on Trump reclassification rumors [2].
• Fed officials split on policy, adding market uncertainty [3].
• Afternoon catalysts include remaining speakers at the Chicago Fed’s Economic Outlook Symposium [3].