4:15pm: Markets cheer Fed cut
US markets closed higher on Wednesday following the Federal Reserve’s decision to cut interest rates by 25 basis points in its final policy move of the year.
The Dow Jones jumped 497 points, or 1.1%, to 48,058, while the S&P 500 added 46 points, climbing 0.7% to 6,887, just shy of a record close. The Nasdaq rose 78 points, or 0.3%, to 23,654, and the Russell 2000 notched a new all-time high at 2,560, up 1.3%.
Fed Chair Jerome Powell signaled confidence in the trajectory of inflation and economic growth, even as the decision drew a few dissents. Kansas City Fed President Jeff Schmid and Chicago Fed President Austan Goolsbee preferred to keep rates steady, while Fed Governor Stephen Miran pushed for a larger, half-point cut.
“There is no risk-free path for monetary policy, but it seems the committee is banking on higher productivity, implying stronger growth despite softer job creation,” said Jeffrey Roach, chief economist at LPL Financial. “Projections with stronger growth and lower unemployment suggest the Fed will remain committed to bringing inflation down. Investors should expect the Fed to remain on hold in Q1, with the first cut next year likely coming in Q2 if the economy responds to fiscal and policy tailwinds.”
Earnings after the bell include Oracle and Adobe, keeping investors busy with another round of corporate updates.
3:50pm: Proactive news headlines
- American Resources Corp (NASDAQ:AREC) subsidiary ReElement Technologies filed five new patents to enhance U.S. refining capabilities for critical and rare earth elements used in advanced manufacturing, energy, and defense.
- Aftermath Silver Ltd (TSX-V:AAG, OTCQX:AAGFF) company launched new drilling phases at its Berenguela silver-copper-manganese project in Peru and Challacollo silver-gold project in Chile.
- MustGrow Biologics Corp. (TSX-V:MGRO, OTCQB:MGROF)’s TerraSante biofertility product boosted potato yields, size, and quality in commercial trials, significantly increasing grower returns.
- HIVE Digital Technologies (TSX-V:HIVE, NASDAQ:HIVE) produced 290 Bitcoin in November, a year-to-date monthly high and a 182% increase from November 2024.
- Sintana Energy Inc (TSX-V:SEI, OTCQB:SEUSF) said TotalEnergies will become operator and acquire a 40% stake in Namibia’s PEL 83 exploration block, accelerating activity in the Orange Basin.
3:00pm: Stocks gain on Powell comments
Stocks surged higher on Wednesday afternoon following Fed chair Jerome Powell's press conference, with investors encouraged by Powell’s assurance that rate hikes are off the table and that the baseline outlook points to solid growth next year.
The Federal Reserve sent a steady-as-she-goes message on Wednesday, with Chair Jerome Powell stressing that no one on the policy committee is thinking about raising interest rates. “I don’t think a rate hike is anybody’s base case right now,” he said, adding that views inside the Fed range from holding rates steady to cutting further — and even cutting more aggressively.
Powell signaled that January is shaping up as a pause, with a “great deal of data” arriving over the next several weeks that will help clarify the economic picture. “We’re well-positioned to see how the economy evolves,” he said, noting that the Fed has already delivered 75 basis points of cuts since September.
He said economic activity is expanding at a steady pace, supported by solid consumer spending and ongoing investment, including in AI-related areas. Risks to inflation, however, remain “tilted to the upside,” and Powell said inflation should peak early next year if no new tariffs are introduced. Treasury purchases are expected to stay elevated for a few months, he added.
Asked whether the Fed is essentially signaling a hold for now, Powell replied simply: “Um, yes.”
Markets turned positive after the remarks, with the Dow surging ahead 1.2%, the S&P up 0.8% and the Nasdaq back in the green with a 0.5% gain.
2:45pm: Market movers
- Jefferies expects Ferrari (NYSE:RACE) to face ongoing valuation pressure as reduced shipment forecasts and continued earnings downgrades weigh on the stock.
- Nextdoor shares jumped after activist investor Eric Jackson called the platform one of the market’s most misunderstood and laid out a bullish case for the company.
- Uber Technologies Inc (NYSE:UBER, XETRA:UT8) has launched airport kiosks at New York’s LaGuardia Terminal C that let travelers book rides without using the app.
- Abivax SA (NASDAQ:ABVX, EPA:ABVX) shares spiked on rumors of a potential takeover by Eli Lilly and Co (NYSE:LLY), though neither company has confirmed the speculation.
- Cracker Barrel Old Country Store (NASDAQ:CBRL) shares fell after the company missed first-quarter revenue expectations and cut its full-year outlook.
2:10pm: Fed delivers rate cut
The Federal Reserve delivered another widely expected rate cut on Wednesday, trimming the federal funds target range to 3.50%–3.75% in a 9-3 vote and sticking to its message of a “shallow” easing cycle ahead.
Fresh economic projections offered a slightly more upbeat outlook. Officials now see GDP growth in 2026 at 2.3%, up from 1.8% in September, while PCE inflation is forecast to ease to 2.4%, compared with 2.6% previously. The unemployment rate is projected to hold around 4.4%.
On rates, the Fed made almost no changes. The new December “dot plot” keeps the policy path essentially identical to September’s—meaning no additional cuts have been added to the outlook. Policymakers still expect the funds rate to drift from 3.6% in 2025 to 3.1% in 2027–28, with the longer-run neutral rate holding steady at 3.0%.
Here’s where the median projections landed:
- 2025: 3.625% (unchanged)
- 2026: 3.375% (unchanged)
- 2027: 3.125% (unchanged)
- 2028: 3.125% (unchanged)
- Longer run: 3% (unchanged)
In plain terms: the Fed is signaling one rate cut in 2026, one in 2027, and zero in 2028—reinforcing the message that while easing is underway, the path remains slow, steady, and decidedly cautious.
1:45pm: Mixed bag for markets
Here’s a quick look at how the major indexes are performing ahead of the Fed rate decision at 2pm ET:
The Dow is in positive territory, 0.3% ahead of opening levels. The S&P is virtually flat, while the Nasdaq has lost 0.4% so far on the day.
The small-cap Russell 2000 continues to make gains, up 0.4% to extend its record run this week.
12:45pm: Russell 2000 at new heights
The Russell 2000 index climbed to a fresh record on Wednesday, trading above 2,531, as investors rotated into small-cap stocks amid optimism that the Federal Reserve could ease monetary policy in the near term.
The benchmark’s gains reflect a market dynamic in which hopes for looser financial conditions are outweighing pockets of economic strength that have pushed yields higher across parts of the curve, analysts at Noble Capital Markets said.
“Small caps tend to be more sensitive to financial conditions and credit availability,” the analysts wrote. “In an environment where rate-cut prospects rise, borrowing costs for smaller companies fall relative to a no-cut scenario, improving the outlook for earnings growth and refinancing.”
12:00pm: Is a SpaceX IPO coming in 2026?
Elon Musk’s space company SpaceX is reportedly planning a stock market listing in coming months that could raise up to $30 billion and value the business at around $1.5 trillion, making it the largest ever initial public offering.
The IPO could take place in mid-to-late 2026, Bloomberg reported, with discussions already underway with investment banks. Reuters suggested a listing could occur as early as June or July next year.
The flotation would rank among the largest in history, potentially surpassing Saudi Aramco’s 2019 listing, which raised $29 billion at a $1.7 trillion valuation.
11:10am: Hunkering down
Investors are "hunkering down" ahead of this afternoon's Fed decision, according to IG's Chris Beauchamp.
“Indecision rules the roost in markets today, and indeed all week, as we await what Jerome Powell has to say," said Beauchamp.
"Hawkish cut, dovish hold, or a surprise? By the time the next Fed meeting rolls around, Trump may have made his pick to replace Powell, and so this might be the last one where the Fed chairman’s words really carry weight.”
10:25am: Fed decision expected
The Federal Reserve is expected to cut interest rates for a third straight meeting on Wednesday, but all eyes will be on its signals for 2026, as markets weigh whether the central bank will continue easing or hold steady.
Despite uneven data flows caused by the government shutdown, markets have steadily increased their bets on a rate cut, though expectations for 2026 have shifted sharply.
After October’s meeting, Fed Chair Jerome Powell warned that a December cut was “not a foregone conclusion,” but softer private-sector payrolls and still-contained inflation risks appear to have tipped the balance. Inflation has been hovering around 3%, above the Fed’s 2% target, though many economists expect price pressures to continue easing into 2026.
Kathleen Brooks, research director at XTB, noted that the outlook is less clear as bond traders have scaled back expectations for future easing, now pencilling in just two cuts in 2026.
Only two further reductions are expected throughout 2026, Brooks noted. “This is an abrupt shift from a week ago when three rate cuts were expected, and it follows a hawkish shift in other regions,” she added. “This leaves the Fed and the BOE as outliers, and could impact the performance of the dollar and the pound in the coming months.”
9.55am: Flattish start, Nasdaq and Russell lagging
It's another mixed start for Wall Street, though none of the moves for major indexes are that big.
The Dow Jones is pretty much flat, up 27 points or 0.056%, with the S&P 500 down less than one point.
Tech stocks are a little lagging, with the Nasdaq down 0.2%. The small cap Russell 2000 is similarly depressed.
Microsoft is down 2.5%, while Meta and Netflix are down just over 1%, otherwise tech names are little moved.
8am: Flat start predicted
Wall Street stocks are expected to remain mostly becalmed when Wednesday trading begins, as investors keep their powder dry before the Federal Reserve decision at 2pm ET.
US stock futures were slightly in the red, with the Dow Jones and S&P 500 seen falling around 0.1%, while futures for the more tech-heavy Nasdaq were down 0.25%.
This is the calm before the Fed, with yesterday's session also being relatively quiet.
In company news, Microsoft Corp (NASDAQ:MSFT) shares were down 1.8% premarket after the company said it will pour $17.5 billion into expanding India’s artificial intelligence infrastructure, its biggest investment in Asia.
Elsewhere, Elon Musk’s SpaceX is reported to be planning a stock market listing next year to raise up to $30 billion with a valuation of around $1.5 trillion that would make it the largest ever IPO.
The IPO could take place in mid-to-late 2026, Bloomberg reported, with discussions already underway with investment banks. Reuters suggested a listing could occur as early as June or July next year.
Today's Fed announcement and press conference from Jerome Powell could unlock two weeks' worth of tension in the stock market, said market analyst David Morrison at Trade Nation.
Markets are ascribing around a 90% probability of a cut of 25 basis points by the Fed’s Federal Open Market Committee today, with the key variables coming from the FOMC’s quarterly summary of economic projections (SEP) released alongside the policy decision, showing each committee member's forecasts for GDP, unemployment, inflation and the Fed Funds rate.
This last part, known as the Dot Plot, in September showed most FOMC members expecting just one more 25bps cut next year.
"If that is the same tonight, then the markets would interpret a cut as ‘hawkish’, and that may not be viewed positively," said Morrison.
Just as important as this is "what Powell says and how he says it", said Kenny Polcari at Slatestone Wealth.
"Will he hint at more cuts? Will he slam the door shut? Or – brace yourself – will he leave the window cracked open for a rate hike down the road? Oh boy, just make sure you grab your espresso before JJ begins speaking because once he starts talking, it is ‘game on’."
Polcari adds that Powell is expected to "lean hawkish, not dovish. The cut is the easy part – it’s everything that comes after that will drive the tone."
If the dots imply a longer glide path or if Powell emphasizes caution, vigilance, or data dependency "we could see bond yields rise and stocks come under pressure as the dream of an ongoing easing cycle gets pushed out."
A more dovish Powell, even subtly, with hints that more cuts remain on the table, then Polcari says algorithmic trading funds "may feel pacified and risk assets could stabilize or even push higher".