The Federal Open Market Committee (FOMC) decided in yesterday’s meeting to cut interest rates by 25 basis points, in line with market expectations, bringing the target range to 3.50%–3.75%. However, the most important element was the dot plot, which signaled only one rate cut of 25 basis points for next year.
The voting results also showed three dissenters out of 12 members: two preferred to keep rates unchanged, while one member voted for a larger 50-basis-point cut. It is also noteworthy that the Fed will begin purchasing $40 billion in U.S. Treasury securities starting Friday, December 12, 2025.
During the press conference, Fed Chair Jerome Powell explained that the rate cut was driven by the gradual cooling in the labor market. He noted that the labor market is facing downside risks and that recent rate cuts will help provide greater stability. Powell added that inflation risks remain tilted to the upside and emphasized that the Fed will make decisions on a meeting-by-meeting basis while closely monitoring upcoming economic data.
Powell also highlighted that the baseline outlook points to strong economic growth next year, while risks lie in the possibility that tariff-related inflation becomes more persistent. He stressed that the Fed remains committed to keeping inflation under control while supporting the labor market.
How did Powell’s remarks impact financial markets?
U.S. major equity indices closed higher:
• S&P 500 closed up 0.68%.
• Nasdaq 100 closed up 0.42%.
• Dow Jones closed up 1.20%.
Gold prices closed higher by 0.49% at 4,228 dollars.
Most major foreign currencies strengthened against the U.S. dollar.
What about U.S. Treasury bonds?
Prices of both short- and long-term U.S. Treasuries rose, pushing yields lower:
• The 2-year yield fell 2.02% to 3.53%.
• The 10-year yield declined 0.84% to 4.15%.
• The 30-year yield dropped 0.33% to 4.79%.
So, who was the biggest loser?
The biggest loser was the U.S. Dollar Index, which:
• Closed at 98.63 yesterday.
• Recorded a decline of 0.61%.
Technical view on the Nasdaq 100
The upward trend in the Nasdaq 100 continues to dominate:
• The index reached 25,835 yesterday and closed at 25,776.
Technical indicators support the continuation of the bullish momentum due to:
- Alignment of the 20-, 50-, and 200-day moving averages in an upward trend.
- The RSI currently at 60, indicating positive momentum.
- A bullish crossover between the MACD line and the signal line, reinforcing the prospects of sustained positive momentum.
Please note that this analysis is provided for informational purposes only and should not be considered as investment advice. All trading involves risk.
