Stocks Climb as Fed Delivers Third Straight Cut: Markets Wrap
(Bloomberg) — Stocks rose after the Federal Reserve lowered interest rates for the third consecutive time at its policy meeting Wednesday. Bond yields fell.
The S&P 500 rose 0.3% while the Nasdaq 100 erased earlier losses. The rally in US stocks had stalled this week after traders pulled big bets off the table, with mixed economic signals and divisions among Fed policymakers clouding the outlook for rates into next year. Investors are gearing up for Fed Chair Jerome Powell’s press conference next.
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Among individual movers, shares of Microsoft Corp. dropped around 3% while GE Vernova Inc. was an outlier, rallying to a record and notching double-digit gains.
US bond yields fell across the curve. The 10-year rate fell around three basis points to 4.16% after reaching the highest since the first week of September in the morning session. Swaps traders are still pricing in two more cuts over the next year.
The cut and the Fed’s tone matched Wall Street expectations for a “hawkish cut,” as officials left intact their outlook for a single cut in 2026.
Chris Brigati, chief investment officer at SWBC, had expected the Fed to telegraph only one cut for next year, given the potential for consumer pricing pressures to reignite.
“The Fed is divided on how to proceed with rate cuts in 2026 given the delicate balance between job market weakness and still elevated inflation,” Brigati said. “There is also uncertainty about the new Fed chair, and that may also add to the central bank’s reluctance to make any major rate moves in the months leading up to Chair Powell’s term ending.”
To Brad Conger, Chief Investment Officer at Hirtle Callaghan, investors should “remain long duration.”
“Neither Powell’s comments nor the Dot Plot should matter for markets. Our view is that the job market is slowing,” he wrote. “The labor weakness will pressure inflation lower (slowly) and justify further cuts. It’s likely that Mr. Hassett will inherit a Fed Funds at 3%.”
Recent economic data have shown that the US economy is cooling in a manner consistent with what the Fed wants, but not weak enough to accelerate rate cuts, according to Linh Tran, market analyst at XS.com. Inflation is easing but still above target, while the labor market continues to show some resilience.
“This combination provides little incentive for investors to continue buying at elevated valuations, yet does not offer sufficient reason for them to sell aggressively,” Tran wrote. “What the market needs at this moment is a clearer policy signal from the Fed.”
Earlier, Bank of Canada held interest rates steady saying current borrowing costs were appropriate to mitigate the trade war damage. Globally, a view that rate-cutting cycles are nearing their end has driven yields on a Bloomberg gauge of long-dated government debt to a 16-year high.
For those expecting fireworks after Powell’s speech, Bespoke Investment Group notes that much of his tenure has been marked by steep selloffs in the final hour of trading. Still, over the last five Fed days, the S&P 500 has managed a gain, according to Bespoke’s analysis.
“Powell cannot afford not to put some kind of caveat on that cut,” Mary-Sol Michel, a director as Swiss Life Private Banking in Paris, said before the meeting. “I’m therefore expecting some volatility after the rate decision and until we get further US job data on Dec. 16.”
Investors will also be watching Oracle Corp.’s post-market results as questions mount over technology valuations and whether heavy investment in artificial intelligence will ultimately pay off. With its shares down 33% from a high in September, the company has emerged as a barometer for AI risk due to a massive spending spree and weaker credit grades.
The combination of the Fed meeting and Oracle has the potential to break the cautious calm of recent days as traders recalibrate their exposure. From there, the first US payrolls report in months is shaping up to be the next catalyst that will steer direction.
Corporate News:
SpaceX is moving ahead with plans for an initial public offering that would seek to raise significantly more than $30 billion, people familiar with the matter said, in a transaction that would make it the biggest listing of all time. US manufacturer GE Vernova Inc. jumped to a record after boosting its buyback and doubling a dividend. Amazon.com Inc. pledged to invest $35 billion in India over the next five years, boosting its spending in the key growth market to expand in businesses from quick commerce to cloud computing. Chinese artificial intelligence startup DeepSeek has relied on Nvidia Corp. chips that are banned in the country to develop an upcoming AI model, according to a new report in The Information. China Vanke Co. rallied in the equity and credit markets Wednesday after a bondholder meeting included discussion of sweetened terms among plans for a closely watched effort by the distressed builder to delay a note payment. Coupang Chief Executive Officer Park Dae-jun resigned over his failure to prevent South Korea’s largest-ever data breach. Aegon Ltd.’s shares dropped after it unveiled disappointing payouts, overshadowing a confirmation it will move its headquarters to the US. Some of the main moves in markets:
Stocks
The S&P 500 rose 0.3% as of 2:20 p.m. New York time The Nasdaq 100 was little changed The Dow Jones Industrial Average rose 0.6% The MSCI World Index rose 0.3% Currencies
The Bloomberg Dollar Spot Index fell 0.3% The euro rose 0.4% to $1.1670 The British pound rose 0.4% to $1.3354 The Japanese yen rose 0.4% to 156.29 per dollar Cryptocurrencies
Bitcoin was little changed at $92,659.35 Ether rose 2.7% to $3,390.57 Bonds
The yield on 10-year Treasuries declined three basis points to 4.16% Germany’s 10-year yield was little changed at 2.85% Britain’s 10-year yield was little changed at 4.51% Commodities
West Texas Intermediate crude rose 0.4% to $58.51 a barrel Spot gold rose 0.1% to $4,212.46 an ounce This story was produced with the assistance of Bloomberg Automation.
–With assistance from Andre Janse van Vuuren, Kwaku Gyasi, Neil Campling, James Hirai, Julien Ponthus and Levin Stamm.
©2025 Bloomberg L.P.
