Fed 25bp Cut Spurs Equity Rally
Key Points
- The Fed cut the federal funds rate 25 basis points to 3.50%-3.75% and resumed technical Treasury-bill purchases, prompting declines in short-term yields and repricing of fed funds futures.
- Fed-driven yield moves supported U.S. equities, with the S&P 500 (SPX), Dow Jones and Nasdaq rallying while Basic Materials and Industrials led sector gains and Utilities lagged.
- China's November CPI accelerated to 0.7% year-on-year, leading markets to reassess PBOC easing bets and exert modest tightening pressure on the CNY.
- Reports that silver topped $60 an ounce drew safe-haven and industrial demand flows, boosting precious-metals sentiment and related commodity markets.
Global Market Summary
The U.S. benchmarks rallied after the Federal Reserve cut the federal funds rate by 25 basis points and announced technical Treasury-bill purchases; the S&P 500 (SPX) rose 0.67%, the Dow Jones Industrial Average (DJIA) gained 1.05% and the Nasdaq Composite (^IXIC) added 0.33%. European markets were mixed with the CAC 40 (FRA40) down 0.37% while the FTSE 100 (UKX) edged up 0.14% and the DAX (DAX) slipped 0.13%, and in Asia mainland China's SSE (000001.SS) fell 0.23% as the Hang Seng (HSI) rose 0.42% and the Nikkei (NKY) eased 0.10% amid China CPI and global policy moves.
Top Movers
Sectors: Basic Materials (XLB 1.96%) and Industrials (XLI 1.83%) led gains, followed by Consumer Discretionary (XLY 1.47%) and Healthcare (XLV 1.45%). Weakest: Utilities (XLU -0.05%) was the only sector in the red. Notable stocks: PLAB (45.39%), WRBY (27.35%) and GEV (15.62%) led gainers while AVAV (-12.85%) and TMC (-11.50%) were among the top decliners.
Macro highlights
The Federal Reserve cut the federal funds rate 25 basis points to 3.50%-3.75% and said it will resume technical purchases of Treasury bills, prompting declines in short-term Treasury yields and a repricing of fed funds futures. Chair Powell reiterated a meeting-by-meeting, data-dependent approach and the FOMC's projections signaled only one additional 25 basis-point cut penciled in for 2026, which trimmed immediate expectations for further easing. China's November CPI accelerated to 0.7% year-on-year, leading markets to reassess PBOC easing bets and exert modest tightening pressure on the CNY.
News that moved markets
The Fed's 25 bp cut and T-bill purchase plan dominated trading, triggering short-term yield moves and supporting equity gains. Reports that silver topped $60 an ounce drew safe-haven and industrial demand flows, boosting precious-metals sentiment and related commodity markets. Heidrick & Struggles completed a take-private transaction backed by Advent International, Corvex Private Equity and a global network of strategic investors, and Quorum Information Technologies closed its arrangement. Announced transactions included FIBRA Prologis's acquisition of 540,000 square feet, First Bank of Alabama's planned acquisition of First Fidelity Bank and MANTECH's purchase of data and AI firm Elder Research.
Upcoming session watchlist
- BR Retail Sales MoM (OCT) — forecast 0.1% vs -0.3% prior, Dec 11, 12:00 PM | Gauges consumer demand and signals near-term activity momentum and growth.
Key Takeaways
- U.S. benchmarks rallied after the Fed's 25bp cut and T-bill purchases; the S&P 500 (SPX) rose 0.67%, the Dow gained 1.05% and the Nasdaq added 0.33%.
- Short-term Treasury yields declined and fed funds futures were repriced immediately after the Fed's decision, reflecting the cut and the T-bill purchase plan.
- Basic Materials and Industrials were the strongest sectors, while Consumer Discretionary and Healthcare also gained; Utilities was the lone sector in negative territory.
- Deal activity featured completed take-privates and announced acquisitions, including Heidrick & Struggles' take-private and FIBRA Prologis's acquisition of 540,000 square feet.
References
- 1. https://www.reuters.com/business/finance/fed-says-will-start-reserve-management-treasury-bill-buying-2025-12-10/
- 2. https://www.cnbc.com/2025/12/10/fed-meeting-today-live-updates.html
- 3. https://x.com/WhiteHouse/status/1998774707341176884
- 4. https://x.com/WhiteHouse/status/1998560161632498048
- 5. https://x.com/i3_invest/status/1998768415939371471
- 6. https://x.com/BIS_org/status/1998648930045776161
- 7. https://x.com/Barchart/status/1998553261486248306
- 8. https://x.com/ENERGY/status/1998790282549379358
- 9. https://www.reuters.com/business/feds-powell-says-rate-policy-well-positioned-future-policy-not-pre-set-course-2025-12-10/
- 10. https://english.www.gov.cn/archive/statistics/202512/10/content_WS69391069c6d00ca5f9a08047.html
- 11. https://www.federalreserve.gov/monetarypolicy.htm
- 12. https://www.bankofcanada.ca/2025/12/opening-statement-2025-12-10/
- 13. https://x.com/BIS_org/status/1998759639794500071
- 14. https://x.com/WhiteHouse/status/1998764307627258000
- 15. https://x.com/Barchart/status/1998840489701765415
- 16. https://x.com/WhiteHouse/status/1998823748389188039
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