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Last Updated: 11-Dec-25 09:01 ET | Archive
The Fed informs, and the stock market performs
Briefing.com Summary:
*The stock market was generally pleased by what it saw and heard yesterday from the Fed.
*Oracle is down 13% after reporting earnings, casting a pall on the AI trade.
*Continuing jobless claims dropped to their lowest level since April 2025.
By most accounts, the Fed did the stock market a solid yesterday by cutting the target range for the fed funds rate 25 basis points, sending a signal that it expects economic growth to accelerate next year and inflation to decelerate, calming money markets with a $40 billion Treasury bill purchase plan, and generally not sounding as hawkish as feared.
The icing on the cake was Fed Chair Powell's declaration in the press conference that he doesn't think a rate hike is anyone's base case at this point.
You could see the relief and encouragement in the tape. Stocks rallied after the announcement, with cyclical sectors, small-cap stocks, and value stocks setting the pace; Treasury yields dropped, and the dollar weakened.
The S&P 500 came within a whisker of registering an all-time closing high. And, then, Oracle (ORCL) reported relatively disappointing quarterly results after the close, spoiling some of the fun, so to speak.
Oracle's revenue was weaker than expected, its free cash flow was worse than expected, and it raised its capex guidance. Shares of ORCL are down 13% in pre-market action, which has cast a pall on the AI trade and the broader market.
Currently, the S&P 500 futures are down 25 points and are trading 0.4% below fair value, the Nasdaq 100 futures are down 136 points and are trading 0.6% below fair value, and the Dow Jones Industrial Average futures are up 21 points and are trading fractionally above fair value.
The stage is set, then, for a mixed open, but with the Fed conveying a better-than-feared stance, one has reason to expect that there will be an inclination to buy into weakness, especially since Oracle's position in the AI universe has some company-specific issues surrounding it, namely the significant debt it is taking on to fund the buildout of data centers.
If market participants can compartmentalize the Oracle situation, then there is a greater chance that the indices will look better at the end of the day relative to the start of the day. This morning's economic data didn't upend that possibility.
The September trade deficit narrowed to $52.8 billion (Briefing.com consensus: -$61.7 billion) from an upwardly revised $59.3 billion (from -$59.6 billion) in August.
The key takeaway from the report is that the narrower deficit was the byproduct of exports being $8.4 billion more than August exports and imports being $1.9 billion more than August imports.
Initial jobless claims for the week ending December 6 increased by 44,000 to 236,000. Poor seasonal adjustment factors have attracted blame for the big week-over-week jump in initial claims from the Thanksgiving week. Continuing jobless claims for the week ending November 29 decreased by 99,000 to 1.838 million, which is the lowest since April 2025.
The key takeaway from the report is that, on balance, it doesn't point to a material weakening in the labor market.
The 2-yr note yield is down five basis points to 3.52%, and the 10-yr note yield is down three basis points to 4.13% on a continuing relief trade following the Fed's informative presentation yesterday.
