Central Bank Maintains Policy, Offers 2026 Rate Cut Outlook
Stocks were mostly flat to slightly lower last week as the Federal Reserve concluded its final meeting of the year. Policymakers voted to keep the federal funds rate unchanged, as expected, and the latest dot plot showed projections for three rate cuts in 2026.
The S&P 500 declined 0.2%, the NASDAQ lost 0.5%, and the Dow Jones Industrial Average ticked up 0.2%. After weeks of strong gains, markets took a brief pause amid mixed economic signals and rising Treasury yields.
Yields Rise as Market Reassesses Rate Path
The 10-year Treasury yield rose to 4.23%, reversing part of its recent decline. While the Fed’s stance was largely expected, markets had grown increasingly optimistic about early 2026 rate cuts. The Fed’s updated forecast remains cautious, suggesting that inflation must continue to slow before any policy change occurs.
Labor market data remained stable, and retail sales showed modest gains heading into the holiday season. Inflation readings held within expected ranges.
Sector Rotation Continues as Energy Leads
Energy and materials sectors outperformed during the week, while technology and real estate pulled back. The shift reflected some rebalancing after recent strong performance in interest-rate-sensitive names.
International markets were mixed, with developed markets holding steady and emerging markets showing weakness tied to currency pressures.
Alphastar CIO Tony Parish noted:
“The Fed struck a familiar tone this week — steady for now, with future moves dependent on the data,”
Here are three considerations for investors to monitor:
-
Fed Caution Reinforces Data-Driven Outlook
The Federal Reserve continues to emphasize a wait-and-see approach, making upcoming inflation and labor market data central to shaping expectations.
-
Rate-Sensitive Assets May Pause as Yields Bounce
With Treasury yields rising again, sectors such as real estate and utilities may face renewed headwinds in the short term.
-
Commodity Sectors Gaining Ground
Stronger performance in energy and materials reflects shifting sector leadership. Continued volatility in oil and global trade flows may impact this trend.
Final Thoughts
After a strong November and early December, markets took a modest step back as the Fed reiterated its cautious approach. The economic outlook remains stable, but investors are likely to stay focused on inflation, jobs, and interest rates into early 2026.
As Tony Parish put it:
“This was a message of patience — the Fed reminded us it’s watching, not rushing.”
READ THE FULL REPORT
Disclosure:
This blog post is for informational purposes only and should not be considered investment advice. Past performance does not guarantee future results. All data is as of December 15, 2025. Please consult with a qualified financial professional for personalized advice.
Fed Holds Steady as Markets Ease Back: Week of December 15, 2025
Central Bank Maintains Policy, Offers 2026 Rate Cut Outlook
Stocks were mostly flat to slightly lower last week as the Federal Reserve concluded its final meeting of the year. Policymakers voted to keep the federal funds rate unchanged, as expected, and the latest dot plot showed projections for three rate cuts in 2026.
The S&P 500 declined 0.2%, the NASDAQ lost 0.5%, and the Dow Jones Industrial Average ticked up 0.2%. After weeks of strong gains, markets took a brief pause amid mixed economic signals and rising Treasury yields.
Yields Rise as Market Reassesses Rate Path
The 10-year Treasury yield rose to 4.23%, reversing part of its recent decline. While the Fed’s stance was largely expected, markets had grown increasingly optimistic about early 2026 rate cuts. The Fed’s updated forecast remains cautious, suggesting that inflation must continue to slow before any policy change occurs.
Labor market data remained stable, and retail sales showed modest gains heading into the holiday season. Inflation readings held within expected ranges.
Sector Rotation Continues as Energy Leads
Energy and materials sectors outperformed during the week, while technology and real estate pulled back. The shift reflected some rebalancing after recent strong performance in interest-rate-sensitive names.
International markets were mixed, with developed markets holding steady and emerging markets showing weakness tied to currency pressures.
Alphastar CIO Tony Parish noted:
Here are three considerations for investors to monitor:
Fed Caution Reinforces Data-Driven Outlook
The Federal Reserve continues to emphasize a wait-and-see approach, making upcoming inflation and labor market data central to shaping expectations.
Rate-Sensitive Assets May Pause as Yields Bounce
With Treasury yields rising again, sectors such as real estate and utilities may face renewed headwinds in the short term.
Commodity Sectors Gaining Ground
Stronger performance in energy and materials reflects shifting sector leadership. Continued volatility in oil and global trade flows may impact this trend.
Final Thoughts
After a strong November and early December, markets took a modest step back as the Fed reiterated its cautious approach. The economic outlook remains stable, but investors are likely to stay focused on inflation, jobs, and interest rates into early 2026.
As Tony Parish put it:
READ THE FULL REPORT
Disclosure:
This blog post is for informational purposes only and should not be considered investment advice. Past performance does not guarantee future results. All data is as of December 15, 2025. Please consult with a qualified financial professional for personalized advice.