Stock Market Update

Equity futures are pointing to a flattish start, as participants show restraint in front of the FOMC decision at 2:00 p.m. ET and Fed Chair Powell's press conference at 2:30 p.m. ET.

The market is expecting the FOMC to cut the target range for the fed funds rate by 25 basis points to 3.50-3.75%. However, it is also expecting this decision to be a "hawkish cut," which is to say that an assumption is being made that Fed Chair Powell will communicate the committee's thinking that another rate cut is unlikely to happen soon.

There has been a smattering of corporate news, but the market's fixation this morning is on the Fed meeting, with some peripheral attention being paid to rising bond yields ahead of that meeting. The 10-yr note yield is at 4.20%, up 19 basis points this month.

In corporate news:

• AeroVironment (AVAV) misses by $0.34, reports revs in-line; guides FY26 EPS below consensus, revs below consensus
• Cracker Barrel (CBRL) beats by $0.05, reports revs in-line, comparable store restaurant sales decreased 4.7%; lowers FY26 revenue and adjusted EBITDA guidance
• GE Vernova (GEV) reaffirms FY25 guidance, provides FY26 guidance, and raises multi-year financial outlook; also doubles quarterly dividend to $0.50/share and increases buyback authorization to $10 bln
• Marvell (MRVL) CEO Matt Murphy responds to reports of lost business from Amazon (AMZN) in CNBC interview; says "those orders are in the books"
• Mastercard (MA) increases quarterly cash dividend 14% to $0.87/share from $0.76/share and approves $14 billion share repurchase program
• Oracle (ORCL) to report earnings results after the close

Reviewing overnight developments:

Equity indices in the Asia-Pacific region ended the midweek session on a mostly lower note. Japan's Nikkei: -0.1%, Hong Kong's Hang Seng: +0.4%, China's Shanghai Composite: -0.2%, India's Sensex: -0.3%, South Korea's Kospi: -0.2%, Australia's ASX All Ordinaries: -0.1%.

In news:

• The Chinese government will reportedly limit access to NVIDIA's H200 chips even though the Trump administration is removing restrictions on exports of those products.
• China's CPI deflated unexpectedly in November (-0.1% m/m) but the year-over-year reading accelerated to 0.7% from 0.2% in October. This was the fastest yr/yr rate of increase since February 2024.
• Taiwan's exports jumped 56% yr/yr in November, representing the fastest increase in 15 years. U.S.
• Trade Representative Greer said that the trade deal with Indonesia is at risk due to Indonesia backtracking on multiple commitments.

In economic data:

• China's November CPI -0.1% m/m (expected 0.2%; last 0.2%); 0.7% yr/yr, as expected (last 0.2%).
• November PPI -2.2% yr/yr (expected -2.0%; last -2.1%)
• Japan's November PPI 0.3% m/m, as expected (last 0.5%); 2.7% yr/yr, as expected (last 2.7%).
• December Reuters Tankan Index 10 (last 17) South Korea's November Unemployment Rate 2.7% (last 2.6%)
• New Zealand's October Visitor Arrivals 0.6% m/m (last 2.9%) and External Migration and Visitors 9.4% yr/yr (last 9.6%)

Major European indices trade on a mostly lower note, though overall movement has been limited. STOXX Europe 600: -0.1%, Germany's DAX: -0.5%, U.K.'s FTSE 100: +0.3, France's CAC 40: -0.3%, Italy's FTSE MIB: -0.3%, Spain's IBEX 35: -0.9%.

In news:

• European Central Bank policymakers continued speaking in favor of maintaining current policy with members Sinkus and Villeroy de Galhau saying that rate changes are not needed at this time.
• Germany's Chemical Industry Association saw a 1% drop in 2025 revenue with little hope for improvement in 2026.
• The Bank of France expects Q4 GDP to decelerate to 0.2% from 0.5% in Q3.

In economic data:

• Italy's October Industrial Production -1.0% m/m (expected -0.3%; last 2.7%); -0.3% yr/yr (expected 0.2%; last 1.4%)