MARKET COMMENTARY
The December rally stood tall with all major indexes closing higher last week. While the upcoming week doesn’t appear too eventful, the bright spot is the long-awaited and heavily debated FOMC interest rate decision where we will hear from Jerome Powell on how the committee is approaching policy in an improving but still data dry environment. We’ll also receive earnings from Oracle, who’s been in a rut this past month, and Broadcom, who’s been holding strong despite a pullback in many AI-backed names. Finally, the Senate will assemble to vote on a healthcare proposal, a condition agreed upon in order to end the government shutdown. It will be interesting to find out what exactly both parties can finally agree on to sustainably avert a future rerun of recent debacle.
The final Fed meeting of the year takes place this Wednesday. The probability of a rate cut fluctuated drastically since the FOMC last met, with the current odds of one more rate cut at 96%. While this decision may sound absolute, the committee itself is far from being on the same page. In fact, with the notions we’ve received over the past few weeks from different Fed chairs, it’s possible that we see four or more Fed official’s dissent. This would be the largest split since 1992 and a reflection of the current environment of uncertainty that’s developed from months of delayed economic data following the government shutdown. What we do know is that inflation has lingered about 1% above its target for the majority of 2025. What we don’t know is where unemployment lies past September, so another preemptive cut may be necessary to prevent further deterioration of the slowing job market. With the unfavorable corrections to labor reports earlier this year, we believe the Fed is once again prioritizing this side of the dual mandate.
After a month of volatility, technical indicators have recovered some bullishness. More stocks are in an uptrend reaching new highs, as well as trading above their longer-term moving averages. In the short-term, we’re catching positive momentum again and price action is looking up, especially within small-caps. Breadth, while dismal for most of our recent memory, is beginning to show signs of strength as the range of companies in solid technical stages widens and summation remains positive. Likewise, investor sentiment has finally shifted out of extreme fear, creating a semi-better picture overall than in recent weeks.
Economic Releases This Week
Monday: None
Tuesday: Job openings (October), NFIB Small Business Optimism
Wednesday: Fed Interest Rate Meeting
Thursday: Initial Jobless Claims, U.S. Trade Deficit
Friday: None
Stories to Start the Week
Paramount launches hostile bid for Warner Bros Discovery after losing to Netflix in months long bidding war
Senate votes later this week on whether to extend Affordable Care Act tax credits, a key aspect of the deal that ended the government shutdown
Why Gen Z job hunting is out of control right now? The shrinking pool of entry level jobs for recent grads
Trump announces $12 billion aid package for farmers caught up in trade war
Lando Norris won the 2025 Formula 1 World Championship
Technical trading models are mathematically driven based upon historical data and trends of domestic and foreign market trading activity, including various industry and sector trading statistics within such markets. Technical trading models, through mathematical algorithms, attempt to identify when markets are likely to increase or decrease and identify appropriate entry and exit points. The primary risk of technical trading models is that historical trends and past performance cannot predict future trends and there is no assurance that the mathematical algorithms employed are designed properly, updated with new data, and can accurately predict future market, industry and sector performance.
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