Santa Rally Hinges on Fed Guidance 08/12/2025

HOT stories for today

Market wrap:

• U.S. equities logged a second straight week of gains, with all three major benchmarks advancing. The Dow Jones Industrial Average rose 0.5% for the week, while the Nasdaq Composite climbed 0.9%. The S&P 500 added roughly 0.3%, leaving the broad gauge within about 0.7% of its all-time intraday peak. The S&P 500 and Nasdaq capped Friday with four-day winning streaks, and the Dow has advanced in three of the past four sessions.
• Stocks caught an additional lift Friday after a delayed reading of September core PCE, the Federal Reserve’s preferred inflation metric, registered softer than economists projected. The release was among the final key data points before policymakers convene this week. Monday’s calendar is light, though investors will parse the New York Fed’s consumer-expectations survey in the morning. Earnings from Lululemon, Costco, Broadcom, Oracle, and Adobe are also on deck. In global trade, China’s shipments to the U.S. extended their double-digit slide, tumbling 29% in November despite a nominal easing in tensions. Crypto markets saw sharp volatility, with Bitcoin snapping back from below $88,000 to as high as $91,767, unleashing a wave of liquidations as large buyers rushed back in.

Santa Rally Hinges on Fed Guidance

• Investors head into this week’s Federal Reserve meeting largely convinced the central bank will deliver a 25-basis-point rate cut, with futures assigning an 87% probability to such a move. The question now is whether policymakers will signal enough easing for 2026 to ignite a year-end “Santa Claus rally.” Markets have rebounded sharply since November’s pullback, helped by the end of the government shutdown and softer labor-market data that revived expectations for December easing. But analysts stress that additional cuts penciled in for 2026—not Wednesday’s decision—will determine whether equities can break to new highs.
• “It’s the 2026 projections that matter,” said eToro’s Bret Kenwell. “That will set the tone for the rest of the month.” Traders will parse the Fed’s Summary of Economic Projections and Chair Jerome Powell’s remarks for cues; any hint of caution on future cuts could cool sentiment, as it did after last year’s December meeting. Options markets are bracing for turbulence, with traders pricing in a 1.3% swing in the S&P 500 on Wednesday, its most significant implied move for the remainder of the year. “There’s going to be a lot of volatility,” said George Kailas, CEO of Prospero.ai, who sees scope for tech benchmarks to swing 5–10% in either direction.

Stocks on the move:

• Paramount Global (PARA): The media company’s shares fell 7% after it lost out to Netflix in a bid to acquire Warner Bros. Discovery. Paramount had been viewed as a front-runner. Comcast (CMCSA), which also submitted an offer, rose less than 1%.
• Parsons (PSN): Shares of the government contractor slid nearly 26% after it failed to win a bid to help modernize the U.S. air-traffic control system, which went to privately held Peraton.
• Albemarle (ALB): The lithium producer jumped 8% after UBS upgraded the stock to buy, citing expectations for rising lithium prices through the year.
• SoFi Technologies (SOFI): Shares dropped 7% after the fintech firm announced a $1.5 billion underwritten public offering of common stock.

Watchlist: NVDA, SOFI, NFLX, ORCL, COIN, MSFT, META, AMZN

Key Economic Events Today:

EST time

No significant economic data.


Earnings

No significant earnings!


The TEFS Analyst team wishes you a successful day!