Here is Schwab's early look at the markets for Thursday, December 11.
After the third consecutive rate cut from the Federal Reserve yesterday, investors eye its impact on stocks and Treasuries while digesting results from tech giant Oracle and awaiting this afternoon's earnings from AI titan Broadcom.
The 25-basis point rate cut took the target range for the Fed funds rate to between 3.5% and 3.75%, the lowest in three years. It was the first time the Fed has cut rates by 25 basis points in three straight meetings since 2019, though last year it cut by 50 basis points followed with two cuts of 25. The decision to cut rates wasn't unanimous however, with three Fed board members voting against the move for the first time since September 2019. Still, Fed Chairman Jerome Powell's relatively dovish post-meeting comments helped assuage investors' fears that they may have to fight a hawkish central bank moving forward.
While the press conference was largely viewed as leaning dovish, Powell suggested that after 75 basis points of cuts since September 2025 and 175 basis points of cuts since September 2024, the current target range "is in a broad range of estimates of neutral value," and that the committee "is well positioned to wait and see how the economy evolves from here."
This could be interpreted as supporting a pause in rate policy and watching the data. The Fed hasn't seen much in the way of numbers for this quarter due to the government shutdown. The key November nonfarm payrolls report is due next Tuesday.
All three major market indexes rose on Wednesday, with the S&P 500 closing near a record high in the wake of the Fed meeting. Treasury yields, meanwhile, fell sharply across the curve, reversing their recent trend. The 10-year Treasury yield was up 19 basis points this month alone heading into the meeting, creating a bearish overhang hinting at inflation and debt worries. A steepening yield curve—in which short-term yields soften on rate policy while long-term yields stay high and continue to weigh on borrowing costs—likely remains a threat.
"The major trend continues to be the steepening of the yield curve," said Kathy Jones, chief fixed income strategist, Schwab Center for Financial Research, or SCFR. "That’s a signal that the market is nervous about inflation as well as rising supply due to high and increasing deficits. There is also a risk premium being built into the market for weakening the Fed’s independence."
Jones looks for one-to-two more rate cuts in 2026, bringing the target range for the fed funds rate down to 3% to 3.5%.
"Unless the economy weakens considerably or inflation falls, that’s about as low as it makes sense for rates to fall," Jones said. "The reasoning for a rate cut is evidence that the labor market is weakening. While we don’t have up-to-date jobs data, the numbers we have suggest that the labor market has stalled with little hiring taking place. Layoffs have started to pick up, although not at recessionary levels."
Wednesday's rate cut came with the Fed's updated quarterly economic projections and the "dot plot" of where officials see rates headed. The median estimate for the December "dot plot" pegged the Fed funds rate at 3.4% by the end of 2026, while gross domestic product, or GDP, growth was seen at 2.3% and core inflation at 2.5%. Growth estimates rose from September's projections while inflation estimates fell, but Fed officials are still penciling in just one rate cut in 2026 for now. However, the range between voting members' estimates for interest rates next year has widened, with the most dovish official now expecting the Fed funds rate to fall to 2.1% and the most hawkish official seeing rates rising to 3.9%.
The CME FedWatch Tool pegged January rate cut odds at 22.1% as of Wednesday afternoon. By the end of 2026, the futures market is pricing in a more than 70% chance of the Fed funds rate falling to a range of 3% to 3.25% or below.
The Fed has based recent rate cuts on labor market weakness. However, inflation remains well above the central bank's 2% goal. The last reading on core personal consumption expenditures, or PCE, the Fed's favored inflation metric, showed a 2.8% year-over-year rise.
Shifting to corporate earnings news, Oracle, a major player in cloud infrastructure and data centers which relies on AI chips, reported better-than-expected earnings results, but missed revenue estimates after the close Wednesday. Shares fell in after-hours trading, with investors focused on the company's weaker-than-expected cloud infrastructure and software revenue.
Semiconductor giant Broadcom reports after today's close. Shares have surged this year based partly on Broadcom's sales of chips to Alphabet, which has emerged as one of the leading firms in the AI arms race. Last time out, Broadcom narrowly beat analysts' earnings and revenue expectations and said it expected $17.4 billion in fourth-quarter revenue, outpacing consensus. Investors might be looking for more color on Broadcom's strategic collaboration with OpenAI announced in October.
As far as individual market movers on Wednesday, Warner Bros Discovery stock continued its rise, jumping 4.5% on the day amid a bidding war for the company between Paramount and Netflix. Paramount launched a $108 billion hostile takeover bid for Warner Bros this week in an eleventh-hour attempt to prevent Netflix from acquiring the company.
GE Vernova stock rose 15.6% after raising its outlook for revenue by 2028 to $52 billion from $45 billion and doubling its dividend. It also raised its buyback authorization to $10 billion from $6 billion and said it sees this quarter's revenue coming in toward the higher end of expectations. The company received rating upgrades from Oppenheimer and RBC Capital, while several other firms raised their price targets for the stock.
Marvell Technology stock rose 4%, supported by CEO Matt Murphy's remarks that, contrary to reports, the company hasn't lost any business from major customers, CNBC reported. The semiconductor company previously topped earnings estimates on December 2, revealing it grew revenues by 37% to a new record of over $2 billion in the third quarter of its fiscal year 2026. Marvell also announced last week that it will pay $3.25 billion to acquire Celestial AI, which uses fiber optics to connect AI chips.
Uber stock, meanwhile, continued its slide on Wednesday, falling 5.6%. The ride share and delivery company is coping with regulatory pressure in Europe and Canada, which were recently spurred on by protests from taxi drivers in Barcelona. Morgan Stanley also slashed its price target for Uber to $110 earlier this week.
Nine out of 11 S&P 500 sectors rose on Wednesday. Cyclical sectors, including industrials, materials, and consumer discretionary, drove the market's gains, while defensive sectors like consumer staples and utilities lagged. The tech sector barely climbed, and Oracle's weakness after the close might suggest pressure to come in that arena today. Chip maker shares generally rose yesterday, with Nvidia a notable exception. Microsoft's weakness continued to hurt tech.
The Dow Jones Industrial Average® ($DJI) jumped 497.46 points Wednesday (+1.05%) to 48,057.75; the S&P 500 index (SPX) rose 46.17 points (+0.67%) to 6,886.68, and the Nasdaq Composite® ($COMP) climbed 77.67 points (+0.33%) to 23,654.16.