All eyes are on the Federal Reserve’s final meeting of 2025 to see if the central bank will deliver the interest rate cut the market expects and, especially, what chair Jerome Powell says afterward about the outlook for monetary policy. After recent economic data revealed that inflation hasn’t reignited and the labor market is showing signs of weakness, traders are confident the Fed will lower its key overnight lending rate a quarter percentage point. Interest rate futures trading suggests close to a 90% certainty the Fed policy rate will come down next week, according to the CME Group FedWatch tool . Trust in another rate cut — it would mark the Fed’s third this year and bring the federal funds rate to 3.50%-3.75% – helped send the stock market higher this week. All three major averages scored weekly gains, led by 0.9% for the Nasdaq Composite . “My very strong suspicion is that the Fed will cut next week,” Scott Welch, chief investment officer at Certuity, told CNBC. “The market will react very negatively if they don’t.” In the price With the outlook for lower rates next week already reflected in current stock prices, the move itself won’t act as a catalyst to push prices higher, Welch said. “What will be more important is what Chairman Powell has to say afterward” about the possible path of interest rates in 2026.” The market could respond positively if Powell signals a more dovish outlook for 2026, possibly paving the way for still easier money next year to arrest any slowdown in the jobs market. But Powell could also sound hawkish next week and dampen expectations for further rate cuts. “If he comes out and says, ‘Yeah, we decided to cut but don’t count on [more] going forward,’ I think the market may have a response to that,” Welch continued. Powell’s term as Fed chair ends in May 2026. Treasury Secretary Scott Bessent has said that there’s ” a very good chance ” that President Donald Trump will make an announcement on the next chair “before Christmas.” Lately, National Economic Council Director Kevin Hassett has been seen as the favorite to replace Powell. “Powell’s term is almost up here. I think the market’s more so focused on, ‘Well, who’s coming next, and is that person really going to be leading the charge downward even more so in rates somewhat, regardless of what the data says?'” said David Krakauer, vice president of portfolio management at Mercer Advisors. “The market has basically already priced in 100% that there’s going to be a rate cut next week. I think what you’re seeing here is just more potential fuel for what the longer term trajectory will be under more dovish leadership.” AI clarity After November’s drubbing of artificial intelligence stocks due, at least in part, to concerns around their sky-high valuations, investors next week may get some new insight into where the trade could be headed when Oracle releases its latest quarterly results after the close Wednesday. Also on tap next week: Synopsys on Wednesday, after Nvidia took a $2 billion stake last week , and Broadcom next Friday, after more than doubling in the past year. Oracle soared more than 30% in September alone — one day rising the most since 1992 — after the database management software provider said it had $455 billion in performance obligations from customers, and projected $144 billion in cloud infrastructure revenue in fiscal 2030, up from $10 billion in fiscal 2025. ORCL mountain 2025-10-01 Oracle shares since Oct. 1 Since then, Oracle has been under pressure, tumbling 23% in the fourth quarter amid skepticism about the numbers to be reported next week. “We don’t know if we’re in a bubble. If we are, we think it’s early days,” said Tim Holland, Orion’s chief investment officer. “The Oracle news will be helpful, for sure. It seems, to me, this is a multi-year cycle, and it’s going to be with us at least through 2026 from a capex- and an investment point of view, if not beyond.” Week ahead calendar All times ET. Monday, Dec. 8 Earnings: Toll Brothers Tuesday, Dec. 9 10 a.m. October Job Openings and Labor Turnover (JOLTs) Warnings: AutoZone , Campbell’s , AeroVironment , Cracker Barrel Wednesday, Dec. 10 2 p.m. FOMC Meeting wraps up 2:30 p.m. Powell press conference Earnings: Oracle , Chewy , Vail Resorts , Synopsys Thursday, Dec. 11 Earnings: Broadcom , Ciena , Lululemon , Broadcom , Costco Friday, Dec. 12
Wall Street turns to the Fed next week for more clues on the path ahead
Dec 5, 2025
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