Stocks Steady as Traders Brace for Fed Rate Cut Decision
US equities showed limited movement on Tuesday as Wall Street turned its focus to Wednesday’s highly anticipated Federal Reserve decision — the final policy announcement of the year, and one that could dictate the market tone into December.
The S&P 500 inched 0.1% higher, the Nasdaq gained 0.2%, and the Dow slipped 0.4%, weighed down primarily by a sharp decline in JPMorgan after the bank projected higher-than-expected 2026 operating costs.
Markets Expect a Cut — But the Real Story Is Powell’s Tone
According to CME FedWatch, traders now place an 87% probability on a quarter-point rate cut, up sharply from expectations just a month ago.
That optimism helped drive the Russell 2000 to a fresh all-time intraday high, reflecting how small-cap companies disproportionately benefit from easing financial conditions compared to their large-cap counterparts.
Still, the impact of the move will come down to Powell’s communication.
Investors are watching for:
- Updated growth and inflation projections
- Hints on how quickly the Fed could cut in 2026
- How policymakers interpret uneven economic data
- Any signals tied to next year’s leadership transition
As eToro’s Bret Kenwell noted, investors are hoping the Fed “greases the rails for a year-end rally rather than pouring cold water on the rebound.”
Economic Signals Remain Mixed
The Fed enters this week balancing:
- Moderating inflation
- Unsteady confidence readings
- A labor market cooling unevenly
- Data delays stemming from the government shutdown
Many strategists argue that communication clarity is deteriorating.
Ron Albahary, CIO at LNW, says past months’ “wild swings in expectations” show the Fed’s messaging system may need structural change — something the next chair will likely address when the leadership transition arrives in mid-2026.
Stocks Making Moves
JPMorgan (JPM) – Down 4%
The bank revealed 2026 expenses will hit $105B, exceeding analyst estimates. Investors continue to scrutinize cost expansion at the country’s largest bank.
CVS – Up 2%
Boosted by a more optimistic earnings outlook for 2026.
Campbell Soup – Down 6%
Sales slipped year over year, and while earnings beat expectations, shares dropped to their lowest level since 2009.
Exxon Mobil – Up 2.7%
The oil giant raised long-term forecasts, expecting significant earnings and cash-flow growth by 2030.
Gogo – Down 10%
Shares fell after announcing an investment in satellite-communications startup Farcast.
Silver Surges to a Record High
Silver futures touched $61/oz, now up over 100% year-to-date, marking the best yearly performance for the metal since 1979.
Miners followed:
- Pan American Silver +10%
- Santacruz Silver +9%
- Abrasilver +7%
The move underscores a broader rotation into precious metals as investors hedge policy uncertainty heading into 2026.
Russell 2000 Hits a New Record
The small-cap index has now climbed 14% in 2025, outpacing expectations as falling rates unlock new momentum.
By contrast, the S&P 500 is up 16% — still strong, but no longer the only place investors are looking for returns.
WSA Take
The market is holding its breath. The cut is widely expected — the real market catalyst will be how Powell frames 2026.
Small caps are breaking out, silver is on fire, and financials are offering an early warning on rising costs.
Investor sentiment into year-end now hinges on one thing:
Does the Fed reinforce the rally… or reset expectations?
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