Daily market snapshot

Wednesday, 12/10/2025 p.m.

• Markets rally to new record highs after Fed meeting – U.S. equity markets delivered strong gains this afternoon after the Fed cut interest rates, as widely expected, and provided less hawkish signals than the market had seemingly feared around the path for future policy*. The S&P 500 index was up 0.8%, but the biggest gains were seen in small-cap equity markets, with the interest-rate-sensitive Russell 2000 index up close to 2% over the day*. We also saw a rally in government bond markets after the meeting, bringing the yield on the 10-year U.S. Treasury note down 4 basis points (0.04%) to 4.14% over the session*. Against this backdrop the dollar struggled, falling close to 0.5% against a trade-weighted basket of international currencies*. Conversely, lower interest rates helped push gold prices nearly 1% higher over the day*.  
   
• A divided Fed – As anticipated, the decision to cut rates today was contested, with two FOMC members (Schmid and Goolsbee) voting in favor of unchanged interest rates, while Miran continued to make the case for even deeper rate cuts*. This is the first time we have seen three dissents against an FOMC decision since 2019, underlining the divisions on the Fed's rate-setting committee around the path for policy*. Subtle changes to the language of the Fed's press statement that accompanied the decision today hinted that the central bank is preparing to take a pause from easing at its January meeting, following three consecutive interest-rate cuts*. Chair Jerome Powell seemed to amplify the signal that the central bank would be on hold, in the short term at least, at his press conference, but hinted that the Fed was likely to ease further by arguing it was unlikely the central bank's next step would be an interest-rate hike*.
   
• Ambiguity over 2026 – The updated "dot plot," which contains FOMC members' forecasts for interest rates in coming years, showed wide differences in views across the committee*. The median member is forecasting just one interest-rate cut next year and one further cut in 2027, but this hides a broad dispersion of views*. This caution would be consistent with the continued concerns over inflation at the central bank, with most measures remaining around 3%, above the central bank's 2% target*. Today's closely followed Employment Cost Index report showed a welcome deceleration in wages over the third quarter, indicating some further cooling in domestic price pressures*. However, uncertainty over tariff-driven inflation appears to remain high, and, in our view, the FOMC will likely be watching carefully to see the extent to which firms are passing these costs on to consumers via higher prices in 2026. We think the Fed will cut once or twice more next year, leaving interest rates in the 3%-3.5% range.
   

James McCann;
Investment Strategy

^{Source: *Bloomberg}

Tuesday, 12/9/2025 p.m.

• Stocks little changed ahead of Fed meeting – U.S. equity markets closed near the flatline on Tuesday as investors await the conclusion of the final FOMC meeting of the year tomorrow. Market expectations call for the Fed to deliver a 0.25% interest-rate cut at tomorrow’s meeting*, with much of investors’ attention likely focused on updated Fed economic projections and commentary regarding the appropriate path of monetary policy over the coming year. On the economic front, the NFIB Small Business Index edged higher in November to 99, slightly above expectations for a reading of 98.3.* Additionally, job openings for October were higher than expected, holding steady near 7.7 million and signaling steady labor demand, in our view.* Bond yields closed slightly higher, with the 10-year Treasury yield finishing around 4.18%.*
   
• Small-business optimism improves in November – The NFIB Small Business Index rose to 99 in November, a modest improvement from the prior month and slightly above the 30-year average of 98.* Encouragingly, the percentage of small businesses planning to increase employment climbed to 19% for the month—a four-point increase from October and the highest level since December 2024.* This strong employment reading points to underlying stability in the labor market, in our view, and contrasts with the ADP employment report for November, which showed small businesses shedding over 100,000 jobs.* Additionally, the percentage of small businesses expecting inflation-adjusted sales to rise over the next three months increased to 15%, the highest since January.* We expect labor-market conditions to remain stable despite slowing job growth, which should help support healthy economic activity over the coming year, with real GDP growth settling around 2% in 2026, in our view.*
   
• Dollar weakness has bolstered international stocks in 2025 – The DXY U.S. Dollar Index has come under pressure in 2025 and is on pace to decline by nearly 9% for the year—its worst performance since 2017.* Political and fiscal uncertainty, combined with a narrowing yield advantage versus other developed markets, has contributed to the dollar’s decline, in our view. For investors, the weaker U.S. dollar has boosted international returns, with the MSCI AC World ex U.S. Index up more than 30% in U.S. dollar terms but only 23% in local currency terms.* We expect currency to play a less significant role in international returns over the coming year. However, we do see potential for a flat to weaker dollar, particularly as the European Central Bank appears to be at the end of its easing cycle while the Bank of Japan is expected to continue raising rates*. This could further erode the U.S. yield advantage and put downward pressure on the dollar, in our view, helping to reinforce the case for maintaining a globally diversified portfolio.*

Brock Weimer, CFA;
Investment Strategy

^{Source: *FactSet}

Monday, 12/8/2025 p.m.

• Stocks trade lower to start the week – U.S. equity markets closed lower on Monday as investors await the final FOMC meeting of 2025 later this week.* Leadership was narrow, with technology the only sector of the S&P 500 to finish the day higher, supported by strength in Broadcom shares after reports surfaced that the company is in talks to supply semiconductor chips to Microsoft.* Small-cap stocks were another outperformer, with the Russell 2000 Index edging out a modest gain and now up nearly 4% over the past month.* Overseas, markets in Asia were mixed overnight, while European markets traded mostly lower despite an improvement in the eurozone Sentix economic index.* Bond yields ended the day slightly higher, with the 10-year Treasury yield climbing to around 4.17%.*
   
• Fed meeting in focus – Monetary policy will likely be in focus for investors this week, with the final FOMC meeting for 2025 concluding on Wednesday. Signs of weakness in the labor market from last week's ADP employment report have led bond markets to price in a near 90% probability of an interest-rate cut at Wednesday's meeting, which would bring the fed funds target range down to 3.5% - 3.75%.* With an interest-rate cut at Wednesday's meeting largely expected, investor attention will likely center on the Fed's economic projections for the coming years.* With inflation still running above its 2% target, we expect the Fed to signal a cautious approach to easing in 2026. Our base-case scenario calls for an additional one or two interest rate cuts in 2026, which we think should help provide a modest boost to economic activity throughout the year.
   
• December a historically strong month for stocks – Historically, December has been a favorable month for equity markets, with the S&P 500 gaining 1.4% on average since 1950 compared with an average monthly gain of roughly 0.8% for all months.** Additionally, returns have been positive in roughly 73% of Decembers over this time.** In particular, the final five trading days of December, along with the first two trading days of the New Year, have historically been strong periods for stocks, with some referring to this period as the Santa Claus rally window. Over these seven trading days, the average S&P 500 return has been 0.9% since 1980, with returns positive about 73% of the time.** While there's no guarantee investors will be gifted with a Santa Claus rally this year, history suggests that equity markets could have further room to run as we approach year-end, in our view.   
   

Brock Weimer, CFA;
Investment Strategy

^{Source: *FactSet **FactSet, Edward Jones} 

Friday, 12/5/2025 p.m.

• Stocks hover near all-time highs - Major equity indexes were little changed today but eked out a modest weekly gain to kick off December*. Investors digested the delayed September data on consumer spending and the Fed’s preferred inflation gauge which came in largely as expected. Optimism around a potential Fed rate cut next week continues to support sentiment, alongside a rebound in technology and AI stocks. On the corporate front, Netflix announced a $72 billion cash-and-stock deal to acquire Warner Brothers, though the transaction is expected to face significant regulatory scrutiny. Shares of Netflix dropped 3%, while Warner Brothers shares finished up more than 5% on the news*. Bond yields rose, while the U.S. dollar is largely unchanged*.
   
• Inflation stable, yet persistent - Today’s release of the Fed’s preferred inflation gauge, the Personal Consumption Expenditures (PCE) price index, is expected to show that both headline and core inflation held steady in September compared to August. This would keep the annual rate hovering just below 3%*. Goods inflation likely ticked higher, while services inflation, which makes up a much larger share of the basket, continued its gradual moderation*. Looking ahead, we expect inflation to remain above the Fed’s 2% target through 2026, supported by steady economic growth and lingering price pressures. However, we do not anticipate a sharp reacceleration. Instead, inflation is likely to hold in the 2.5%–3.0% range, with modest improvement by year-end compared to 2025.
   
• All eyes on the Fed next week - Next Wednesday brings the Fed’s policy decision, one that has sparked intense debate, reflected in wide swings in rate expectations and mixed messages from Fed officials. Following recent comments from Fed Governor Williams, bond markets now price in a 95% probability of a rate cut, up from just 30% a couple of weeks ago*. With October and November jobs reports delayed until December 16 due to the government shutdown, the Fed faces a more uncertain backdrop and will likely lean on private data to gauge labor market health. The modest decline in ADP private payrolls for November may push the Fed to cut rates to 3.50%–3.75% next week, in our view. However, we expect the Fed’s projections for 2026 to signal caution on further easing. Our base case calls for one or two additional cuts in 2026 before the Fed concludes its easing cycle.
   

Angelo Kourkafas, CFA;
Investment Strategy

^{Source: *Bloomberg}

Thursday, 12/4/2025 p.m.

• Markets close higher on new labor-market data – Equity markets finished higher on Thursday, with industrial and technology stocks leading gains*. Bond yields rose, with the 10-year U.S. Treasury yield at 4.10%* In international markets, Europe advanced as eurozone retail sales for October rose 1.5% year-over-year, beating forecasts of 1.0% growth*. The U.S. dollar strengthened against major currencies. In commodity markets, WTI oil traded higher, after U.S.-Russia talks did not result in a breakthrough toward to a peace deal*.
   
• Jobless claims, layoffs lower than expected – Initial jobless claims dipped to 191,000 in a holiday-shortened week, below estimates of 221,000*. Continuing claims, which measure the total number of people receiving benefits, were little changed at 1.94 million, also lower than forecasts to tick up to 1.95 million*. Challenger, Gray & Christmas reported layoffs dropped to 71,000 in November, down from 153,000 in October*. We believe this data suggests the labor market is cooling but not collapsing. The unemployment rate remains modest at 4.4%, while job openings at 7.2 million have dipped below unemployment of 7.6 million*. In our view, wage gains should continue to outpace inflation, providing positive real wages to support consumer spending and the broader economy.
   
• Fed's preferred inflation gauge expected to be mixed – Personal consumption expenditure (PCE) inflation for September will be released tomorrow, delayed by the government shutdown. The headline figure is expected to edge up to 2.8%, from 2.7% the prior month*. Core PCE, which excludes more-volatile food and energy prices, is forecast to tick down to 2.8%, from 2.9% in August*. While PCE inflation remains above the Fed's 2% target, we believe the central bank is on track to ease again next week to help support the cooling labor market. Bond markets are pricing in an 87% chance of a rate cut this month, likely followed by another two cuts next year*. We expect inflation to moderate next year, as a slowdown in home prices** and rents*** likely feeds through to the shelter component, in our view, likely enabling the Fed to continue its easing cycle, though at a slower pace.
   

Brian Therien, CFA;
Investment Strategy

^{Source: *FactSet ** S&P national home price index *** Zillow Observed Rent Index}