Investors are somewhat optimistic ahead of the Federal Reserve’s December 9-10 meeting, with markets pricing in an 87% to 89% chance of a 25 basis point rate cut, according to CME FedWatch data. Wall Street slipped on Monday as traders awaited signals from what many describe as the Fed’s most internally divided committee in years, with some officials still worried about inflation regardless of slower consumer spending. Treasury yields somehow moved higher, weighing on equities, though lower rate expectations improved its appeal. The outcome of the meeting will determine whether stocks can extend early December gains into a famous Santa Claus rally or receive coal if the Fed’s message diverges from mainstream mind. Strategists advise that until the decision and guidance arrive, markets will likely remain directionless, caught between hope for continued easing and risk over the Fed’s stance on inflation.
EQUITY
The S&P 500 declined on the week's opening as investors took caution ahead of the Federal Reserve's policy decision, reassessing the 2026 rate path. Market sentiment was influenced by firmer inflation and rising Treasury yields, with the 10-year yield climbing after a 7.5 magnitude earthquake. Confluent came out as the top performer with a 29% gain to a $10.45 billion market cap after IBM confirmed an $11 billion acquisition of the data streaming company.
GOLD
Gold prices continue falling after holding near $4,200 after the end of last week's drag, with markets awaiting the Federal Reserve's widely expected 25 basis point rate cut, with traders focusing on Chair Jerome Powell's 2026 policy guidance and updated economic projections. China's central bank extended its gold-buying streak to thirteen consecutive months. State Street strategists project prices will consolidate between $4,000 and $4,500 in 2026.
OIL
WTI freefall below $59 per barrel as growing oversupply concerns dominated market sentiment, with major forecasters projecting major global surpluses for 2026. Iraq's production restoration at a major oilfield reinforced supply abundance fears, while OPEC+'s recent shift from deficit to surplus projections supported these market dynamics. Investors await this week's key reports from energy agencies and the Federal Reserve's rate decision for clearer direction.
CURRENCY
The dollar index traded higher near 99 ahead of the FOMC meeting, though investors expected a "hawkish" tone for 2026. The euro held around $1.16 in a volatile trade after ECB board member Isabel Schnabel suggested the central bank's next move could be a rate hike rather than a cut. The Australian dollar strengthened after the Reserve Bank of Australia kept rates on hold, and Governor Michele Bullock indicated no further cuts were needed.
