To The Moon

Don’t Count on December

What was expected to be a routine Federal Reserve meeting turned into a lesson in humility for markets that had already priced in another rate cut this year.

Heading into Wednesday’s decision, traders saw over a 90% chance of a December cut. But those odds collapsed after Chair Jerome Powell warned that additional easing was “not a foregone conclusion, far from it.”

The hawkish tone ended the market’s early optimism:

• $S&P 500(.SPX)$ finished flat after flirting with another record.

• Dow Jones Industrial Average fell 74 points (–0.2%), snapping a four-day rally.

• $NASDAQ(.IXIC)$ managed a 0.6% gain, buoyed by tech strength.

• Hot Stock: Teradyne +20.5%

• Biggest Loser: Fiserv –44.0%

• Best Sector: Energy +0.7%

• Worst Sector: Real Estate –2.7%

Inside the Fed’s Decision

Powell Fed

The Fed cut rates by a quarter point, bringing the target range to 3.75%–4.00%, and confirmed that quantitative tightening (QT), the shrinking of its balance sheet, will end on Dec. 1.

But the meeting revealed deep divisions within the Federal Open Market Committee (FOMC):

• Governor Stephen Miran dissented, favoring a larger, half-point cut.

• Kansas City Fed President Jeffrey Schmid dissented the other way, pushing for no cut at all, a sign of mounting caution about inflation.

Schmid has argued that the Fed must protect its inflation-fighting credibility, with prices still running about one percentage point above the central bank’s 2% goal.

Driving in the Data Fog

The government shutdown has halted official economic reporting, leaving policymakers flying partially blind. Powell said the Fed is now relying on private data sources (such as PriceStats, Adobe, and ADP) to track inflation and wages, but admitted that “these sources don’t replace government data.”

“If you’re driving in the fog, you slow down,” Powell said, hinting that limited visibility could make the Fed more cautious in December.

Without official labor and spending data since August, the Fed’s next move depends heavily on how quickly Washington can restore normal data collection.

Tech Takes the Spotlight

After the Fed drama, attention turned to earnings:

• $Alphabet(GOOG)$ smashed expectations, with shares surging in after-hours trading.

• $Microsoft(MSFT)$ beat on cloud growth, but the stock slipped amid lofty expectations.

• $Meta Platforms, Inc.(META)$ tumbled as rising AI infrastructure costs dented margins.

These mixed results set the tone for what could be a volatile trading day ahead.

The Week Ahead

Thursday brings a flood of corporate earnings from major players including $Apple(AAPL)$ , Amazon, Eli Lilly, Mastercard, Merck, Shell, and Reddit, as well as monetary policy decisions from the European Central Bank and Bank of Japan, both expected to hold rates steady.

The Bottom Line

Markets were caught counting their rate cuts too early. The Fed’s message: patience, not promises. With inflation still sticky, the government data pipeline frozen, and earnings season peaking, investors are realizing the final stretch of 2025 may depend less on expectations, and more on endurance…

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This summary is for informational purposes only and does not constitute financial advice. Investors should conduct their own research before making investment decisions.