Wednesday, December 10, 2025

As it turns out, the stock market loved today’s Fed announcement about a 25 bps rate cut. The small-cap Russell 2000 zoomed to a new all-time-high close, while the S&P 500 came within 5 points of its own all-time high. Bond yields, which had ratcheted up to +4.2% on the 10-year, were back down again by the press conference following the Fed statement. There’s now a 60 basis-point (bps) spread between 2-year and 10-year bond yields, for the first time in recent memory.

The Dow climbed +497 points on the day, +1.05%, while the S&P was +46, +0.67%. The Nasdaq was the laggard, only up 77 points or +0.33%, and the Russell gained +33 points, +1.32%. Markets closed off their session highs, ultimately, but there is no question this mini-rally was spurred following the Fed release. Year to date, markets are up +12% (Dow) to +22.5% (Nasdaq).
 

Notes on Today’s FOMC Meeting

For a Fed meeting that was well telegraphed and reported-on in advance, today’s announcement following the latest Federal Open Market Committee (FOMC) meeting did provide some surprises. We did see a -25 basis-point (bps) cut to the Fed funds rate to a range of 3.50-3.75%, but we saw three dissents from the official policy decision for the first time in six years: Chicago Fed President Goolsbee and Kansas City Fed President Schmid voted for no cut this time around, whereas Fed Governor Stephen Miran — on loan from the Trump White House — voted again for a 50 bps cut.

The other, seemingly bigger, surprise is that the augmentation to the Fed balance sheet has now come sooner and at a higher rate than expected. Starting in two days, the Fed will be purchasing $40 billion in Treasury bills, maintaining its balance sheet with an “ample level of reserves.” This “QE adjacent” move was earlier expected to net $20-30 billion in assets beginning some time after the start of the year, so it is a dovish move within what’s being called a hawkish cut.

The Fed’s outlook for 2026 Gross Domestic Product (GDP) moves up half a percentage point to +2.4% currently, with the Inflation Rate predicted to tick down 10 bps to +2.5%, and +2.1% for 2027. As such, 11 Fed members now advocate one rate cut or fewer for all of next year, with seven members in favor of no cuts at all. The conspicuous Miran, on the other hand, advocated a +2.12% Fed funds rate a year from now — 125 basis points in cuts in 2026.

In his press conference, Powell suggested that the current Fed funds rate is within range of the overall neutral rate of inflation. From the top interest rate levels back in September of 2024, the Fed has reduced by -175 bps. Powell referred to the Fed being “well positioned” several times in terms of its preparation to deal with current economic conditions going forward. In all, it was a dovish message from what was largely expected to be a hawkish cut this afternoon.
 

Earnings Results After the Close: ORCL, ADBE, SNPS

Oracle ORCL posted fiscal Q2 earnings results after today’s closing bell with mixed results: earnings of $2.26 per share was a big beat over the $1.63 in the Zacks consensus, while revenues of $16.1 billion were a bit shy of the $16.15 billion analysts were looking for. Remaining Performance Obligations (RPO), which had been a big positive surprise a quarter ago, continued to outperform expectations.

This RPO business, while providing lower margins for the company than other products and services, is nevertheless a gangbusters business these days. Taking in AI and cloud overruns for companies like Meta and NVIDIA rose +438% year over year, even higher than the Q3 tallies. Yet Oracle shares are trading down -3.8% in the after-market, ahead of the company’s conference call.

Adobe Systems ADBE benefited from strong adoption of its AI tools in its fiscal Q4, and resulted in solid beats on both top and bottom lines this afternoon. Earnings of $5.50 per share outpaced expectations of $5.39 (and well above the $4.81 per share reported a year ago) on $6.19 billion in revenues, bettering the $6.10 billion in the Zacks consensus estimate. Guidance for its Q1 was also raised. Shares are up +1% in late trading.

Synopsys SNPS also outpaced expectations in its fiscal Q4 results after today’s close, with earnings of $2.90 per share on $2.26 billion in revenues improving on estimates for $2.79 per share and $2.25 billion, respectively. The company announced a $11.4 billion in backlog, and a big upward adjustment to next-quarter revenues are helping shares gain +5.5% in after-hours trading.

Questions or comments about this article and/or author" Click here>>

Key Earnings Reports For Dec 10, 2025