Key Takeaways

• The Federal Reserve cut rates by 25 basis points as expected and signaled more easing, reinforcing market confidence in near-term monetary support.
• The S&P 500 reached a record high amid the ongoing Santa Claus rally, reflecting strong risk appetite.
• The US dollar weakened sharply following the Federal Reserve’s dovish outlook, impacting currency markets globally.
• China announced fresh stimulus measures, further boosting demand for key commodities.
• Financial market participants are closely monitoring evolving rate expectations and global policy signals.

Introduction

On 16 December 2025, the Federal Reserve’s anticipated 25-basis-point rate cut and indication of further easing shaped the day’s financial market press review. The decision reinforced market confidence and supported a surge in the S&P 500 to record highs during the Santa Claus rally, as global investors adjusted to evolving monetary policies and shifting sentiment across currencies and commodities.

Top Story. Fed Cuts Rates by 25 Basis Points

The Federal Reserve lowered its benchmark interest rate by 25 basis points on 15 December 2025, moving the target range to 4.50 to 4.75 percent. This marks the fourth rate reduction of the year, following 25-basis-point cuts in March, June, and September.

Chair Jerome Powell cited moderating inflation and signs of labor market softening as primary factors behind the decision. Powell stated that the Federal Reserve’s data-dependent approach provided confidence that inflation is moving sustainably toward the 2 percent target, enabling further policy adjustment.

Markets responded positively. The S&P 500 gained 1.3 percent, and the Nasdaq rose 1.8 percent following the announcement. Bond yields declined across the curve, with the 10-year Treasury yield dropping 15 basis points to 3.82 percent.

The Federal Reserve’s updated dot plot now points to three additional cuts totaling 75 basis points in 2026. The next FOMC meeting is scheduled for 27 to 28 January 2026.

Also Today. Economic Data

US Inflation Continues Downward Trend

November’s Consumer Price Index (CPI) rose 2.4 percent year-over-year, down from 2.6 percent in October and below the consensus forecast of 2.5 percent. Core CPI, excluding food and energy, registered at 2.3 percent, its lowest level since March 2021.

This data confirms that inflation pressures are easing, providing the Federal Reserve with additional flexibility. Sarah Williams, chief economist at Capital Research Group, stated that the report validates the Federal Reserve’s more assertive stance and supports ongoing policy normalization.

Housing Starts Exceed Expectations

November housing starts increased by 3.2 percent to an annualized rate of 1.41 million units, surpassing the estimate of 1.35 million. Building permits, a leading indicator of future construction, rose 2.7 percent to 1.45 million.

The stronger housing data suggests that lower mortgage rates (down around 75 basis points since June) are beginning to stimulate activity in residential construction.

Also Today. Corporate News

Tech Giants Announce Workforce Adjustments

Three major technology companies disclosed staffing changes amid shifting economic conditions. Microsoft announced a 5 percent reduction in its global workforce, affecting approximately 10,000 employees, primarily outside its core business units.

Alphabet, in contrast, expanded its hiring plan for AI researchers, announcing 2,500 new positions in machine learning and quantum computing. Amazon initiated a targeted restructuring, eliminating 3,000 roles in its retail division while adding 2,000 positions in AWS and logistics.

These divergent strategies reflect how technology companies are adopting different operational approaches in response to evolving market conditions. Trading discipline suggests that analysis should focus on company fundamentals, rather than sector-wide assumptions.

Energy Merger Creates Industry Giant

Marathon Petroleum and Phillips 66 announced a $53 billion merger agreement, forming the largest downstream energy company in the United States. The all-stock transaction values Phillips 66 at a 15 percent premium to its previous closing price.

The merged entity will control about 27 percent of US refining capacity and operate more than 7,800 retail locations. Regulatory approval remains the main obstacle, with antitrust reviews expected to take six to nine months.

Market Wrap

Equity Indices Show Mixed Performance

The S&P 500 closed up 1.3 percent at 5,732.45 following the Federal Reserve’s decision. The Dow Jones Industrial Average gained 0.8 percent to finish at 43,512.67. The Nasdaq Composite outperformed, rising 1.8 percent to 18,324.53, driven by technology stocks.

European markets closed prior to the Federal Reserve decision, with the STOXX Europe 600 ending down 0.3 percent. Asian markets were mixed, as Japan’s Nikkei 225 fell 0.7 percent and China’s Shanghai Composite gained 0.5 percent.

Sector and Commodity Movements

Technology (up 2.3 percent), Consumer Discretionary (up 1.7 percent), and Financial Services (up 1.5 percent) led sector gains after the rate cut announcement. Defensive sectors underperformed, with Utilities (down 0.4 percent) and Consumer Staples (down 0.2 percent) posting modest declines.

In commodities, gold rose 1.2 percent to $2,645 per ounce, benefiting from lower real yields. Oil prices dropped 1.3 percent, with WTI settling at $72.45 per barrel amid ongoing demand concerns, despite a larger-than-expected US inventory drawdown.

What to Watch. Key Dates and Events

• US Retail Sales for November on 18 December 2025
• European Central Bank policy decision on 19 December 2025
• Bank of Japan monetary policy announcement on 20 December 2025
• US Personal Consumption Expenditures (PCE) data on 23 December 2025
• S&P Case-Shiller Home Price Index on 30 December 2025

Conclusion

The Federal Reserve’s rate cut delivers a clear policy signal, energizing markets and shaping expectations for 2026. The S&P 500’s record close, along with significant movements in currency and commodity markets, underscores the broad impact of US monetary policy. What to watch: upcoming US retail sales and key global central bank meetings will provide further insight into the durability of these market trends.