Benchmark indices on Wall Street barely budged from their previous day’s closing levels ahead of the all important US Federal Reserve interest rate decision past midnight hours Indian time.
The Dow Jones fell nearly 200 points, but the S&P 500 and Nasdaq ended little changed. JPMorgan, a key constituent on the Dow Jones with around 4% weightage, fell over 4% on Wednesday after its Community Banking division CEO projected higher-than-expected costs and a “more fragile” consumer behaviour in 2026.
All eyes tonight are on Jerome Powell as he announces his final rate decision of the year, and the last few as Fed Chair before his term ends in May 2026. While the street is still projecting a close to 90% chance of a 25 bps cut tonight, the commentary on the outlook for 2026 assumes greater significance, more so as the year will see two different Fed chiefs.
Speaking of Fed Chiefs, the Financial Times reported that US President Donald Trump, along with Treasury Secretary Scott Bessent will be meeting potential Fed candidates this week for the final round of interviews for the next Fed Chair. Kevin Hassett, White House National Economic Council Director continues to remain the front-runner for the post.
A CNBC Survey shows only 45% respondents stating that the Fed should cut rates tonight. 84% believe that Hassett will be the next Fed Chair, although only 11% think he is the right choice. 76% respondents stated that the next Fed Chair will be more dovish compared to Jerome Powell.
Speaking at the Wall Street Journal’s CEO Summit, Hassett said that he believes that the Fed has room to cut rates by more than 25 basis points. When asked about whether he would maintain the Fed’s independence from the political establishment if he becomes Fed Chair, Hassett said that he would react to his judgement, which “the President trusts”. In a separate interview to Politico, Trump said that quick lowering of borrowing costs would be the litmus test for his Fed Chair nominee.
The other major trigger tonight will be results from Oracle Corp. which had its worst month since 2001 in October as the street remains concerned over its debt-fuelled AI expansion. The company had raised $18 billion through a major bond sale in September and continues to remain a large issuer of investment-grade bonds, according to Citigroup.
Ahead of the Fed decision, Silver prices are near $61 an ounce, while Copper prices have cooled off from record high levels. The US Dollar index is back above 99, while the 10-year yield remains near the 4.2% mark. Bond markets are pricing in two Fed cuts for 2026.