Stocks wrapped up Friday’s session just shy of fresh record highs, with the S&P 500 stopping just under the 6,900 mark as a nervous bond market eyed the week ahead.
Investors are gearing up for a packed few days, highlighted by the Federal Reserve’s final meeting of 2025 — and Chair Jerome Powell’s last scheduled press conference of the year.
On the corporate earnings front, Wednesday will bring quarterly results from Oracle (ORCL) and Adobe (ADBE), while Broadcom (AVGO) and Costco (COST) headline Thursday’s lineup.
The economic calendar also stays busy, as delayed JOLTS data from October is set to arrive on Tuesday, offering fresh insight into hiring, firing, and quitting patterns across the labor market.
Welcome to Fed Week
Federal Reserve officials head back into their policy meeting on Tuesday, with markets laser-focused on Wednesday’s rate announcement and Powell’s press conference — the last chance this year to hear how the central bank is thinking about 2026.
Recent economic data revealed new cracks in the labor market. Reports from ADP and Challenger, Gray & Christmas showed unexpected job losses and elevated layoffs. That weakness has pushed investors to near-certainty that the Fed will cut rates by 25 basis points, shifting from a 3.75%–4.00% range down to 3.50%–3.75%.
Friday’s PCE inflation report — showing inflation eased in September — only strengthened expectations for a rate cut.
Still, even when the ending feels predictable, investors know the Fed always leaves something to dissect.
The standout moment comes Wednesday at 2:30 p.m. ET, when Powell takes questions after the 2 p.m. policy statement. Even if the decision is widely expected, Powell’s off-script remarks are where markets usually get their real direction.
The central bank will also release the year’s final Summary of Economic Projections, including the closely watched dot plot, outlining how policymakers see the economy evolving in 2026 and beyond.
This meeting will also be the final one with the Fed’s current roster of voting members. Next year, presidents from the Cleveland, Minneapolis, Dallas, and Philadelphia Fed banks rotate in, replacing Boston, Chicago, St. Louis, and Kansas City officials.
And speculation is swirling over who will replace Powell as Fed chair. President Trump has promised to name a nominee early next year, and his top economic adviser, Kevin Hassett, is widely viewed as the frontrunner — a development that has made some bond investors uneasy.
But the biggest wild card remains the data itself. With disruptions from the recent government shutdown, much of the economic data is either delayed, incomplete, or flagged with caveats, making the Fed’s job more complicated.
Is a Santa Claus Rally in Danger?
Stocks ended last week in the green as optimism about a Wednesday rate cut grew even stronger.
But despite the market’s steady march to new highs, Bank of America strategist Michael Hartnett warned that the typical year-end “Santa Claus rally” may not be guaranteed.
A rate cut sounds great — but only if it comes with a strong economy and cooling inflation. Hartnett argues that a dovish Fed could actually make investors nervous. If Powell signals deeper concerns about growth, bond yields could spike, and stocks could pull back.
Yet another reason why Powell’s tone on Wednesday may matter just as much as the decision itself.
A Nervous Bond Market
Bond investors are signaling anxiety heading into 2026. The 10-year Treasury yield climbed more than 10 basis points on Friday, capping one of its roughest weeks in months.
Even with the latest inflation reading seemingly locking in a December rate cut, inflation is still running hotter than the Fed’s target. That’s fueling skepticism over whether multiple cuts will follow next year.
And even if Kevin Hassett becomes Fed chair, markets appear increasingly doubtful he can deliver the rapid, aggressive cuts President Trump would like.
More clarity should finally arrive Dec. 16, when the long-delayed November jobs report gets released.
Bitcoin Watch
Bitcoin’s role as “digital gold” lived up to the hype this year — at least partly. As some investors moved out of the dollar, bitcoin captured a portion of the flows, although actual gold surged nearly 60%.
Despite criticism, bitcoin has consistently held between $75,000 and $120,000 this year, acting as a non-stock, non-cash store of value.
But unlike traditional gold, bitcoin has a history of trading like a risk asset: booming during tech and meme-stock frenzies, slumping when sentiment turns cautious.
This year marks something unusual — bitcoin is set to diverge from stocks for the first time since 2014. While the S&P 500 is up more than 16%, bitcoin remains in the red. Even if it claws back into positive territory, the gap between the two is unusually wide.
With volatility picking up on Friday, bitcoin stays firmly on the watchlist.
Economic and Earnings Calendar
Monday
Economic data:
- New York Fed 1-yr inflation expectations, November (previous: 3.24%)
Earnings: Toll Brothers (TOL), The Children’s Place (PLCE)
Tuesday
Economic data:
- BLS JOLTS data for September & October
- NFIB small business optimism, November (previous: 98.2)
- JOLTS job openings, quits, layoffs, levels, and rates
Earnings: AutoZone (AZO), Ferguson Enterprises (FERG), Casey’s (CASY), SailPoint (SAIL), GameStop (GME), Campbell Soup (CPB), Ollie’s (OLLI), Braze (BRZE), Cracker Barrel (CBRL), Dave & Buster’s (PLAY)
Wednesday
Economic data:
- FOMC rate decision
- MBA mortgage applications (previous: –1.4%)
- Employment Cost Index, Q3 (expected & previous: 0.9%)
- Federal budget balance, November (previous: –$284.4B)
Earnings: Oracle (ORCL), Adobe (ADBE), Synopsys (SNPS), Chewy (CHWY), Nordson (NDSN), Uranium Energy (UEC), Vail Resorts (MTN), Planet Labs (PL), REV Group (REVG)
Thursday
Economic data:
- Initial jobless claims
- Continuing claims
- Wholesale inventories (Sept. final)
- Wholesale sales (previous: 0.1%)
Earnings: Broadcom (AVGO), Costco (COST), Lululemon (LULU), Netskope (NTSK), National Beverage (FIZZ), RH (RH), Vizsla Silver (VZLA), Uranium Royalty (UROY)
