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Stocks Stuck in Wait-and-See Mode Ahead of Fed
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December 10, 2025
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4:42Now PlayingAmanda Agati, Chief Investment Officer of Asset Management at PNC Bank, breaks down market moves ahead of a much-anticipated Federal Reserve rate decision.
Stocks are marking a second day of muted trading as traders wait to hear the Federal Reserve’s views on interest rates for 2026 after an expected cut at Wednesday’s policy meeting. Bitcoin slid.
The S&P 500 drifted while the Nasdaq 100 made small moves lower. A rally in US stocks has stalled this week after traders pulled big bets off the table, with mixed economic signals and divisions among Fed policymakers clouding the outlook for rates. Shares of Microsoft Corp. dropped more than 2% while GE Vernova Inc. was an outlier, notching double-digit gains.
US bond yields were lower after Bank of Canada held interest rates steady. The BoC said current borrowing costs are appropriate to mitigate the trade war damage. The 10-year rate fell to 4.17% after reaching the highest since the first week of September. Globally, a view that rate-cutting cycles are nearing their end has driven yields on a Bloomberg gauge of long-dated government debt to a 16-year high.
Investors will be hanging on to Fed Chair Jerome Powell’s every word with their attention centered on the latest dot plot and economic projections. Traders are widely anticipating a third straight rate cut at Wednesday’s meeting, but fears have been growing that it will be a “hawkish cut” with further easing in question.
Chris Brigati, chief investment officer at SWBC, expects the Fed to telegraph only one cut for next year, given the potential for consumer pricing pressures to reignite.
“The Fed is divided on how to proceed with rate cuts in 2026 given the delicate balance between job market weakness and still elevated inflation,” Brigati said. “There is also uncertainty about the new Fed chair, and that may also add to the central bank’s reluctance to make any major rate moves in the months leading up to Chair Powell’s term ending.”
After a widely expected quarter-point cut today, swaps traders are pricing in two more cuts for next year.
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