Federal Reserve Rate Cut and Market Impacts
The Federal Reserve announced a quarter-point rate cut this week, bringing the benchmark interest rate to a range of 3.5% to 3.75%. Borrowers are hoping for relief in future lending rates, but no significant changes are expected in long-term payments. The Fed’s benchmark rates do not directly affect long-term loans; instead, they are influenced more by Treasury yields and economic growth.
Credit card interest rates may see a slight decrease in the near term, but savings accounts and certificates of deposits could also experience lower returns as the Fed’s rate influences these financial products.
Stock Market Performance
This week, stock market indices showed mixed performance. Some days saw positive gains, with certain indices hitting fresh highs. However, on December 12, the S&P 500, Nasdaq, and Russell 2000 ended up more than 1% lower, while the Dow was down 0.5%, affecting their overall weekly performance.
The S&P 500 declined by 0.6% this week, with notable disappointments from companies like Broadcom and Sandisk. The tech-heavy Nasdaq Composite fell 1.6% for the week, marking a challenging period for tech stocks, especially after Oracle’s earnings report.
Meanwhile, the Dow Jones and Russell 2000 recorded fresh highs, closing 1% and 1.2% higher, respectively.
Commodity Markets
Gold continued its upward trend, rising 2% this week. Silver, which has been making headlines due to the gold craze, gained 5% this week despite a 3% drop on December 12. Silver has recorded an impressive 112% year-to-date gain.
Natural gas prices dropped by 22% this week, attributed to warmer weather forecasts. If this trend continues, energy bills may decrease slightly for those using natural gas for heating and cooking, although it is still up 12.9% year-to-date.
Geopolitical tensions and concerns over oil supply have led to a downward trend in oil prices, with a 4% decline this week and a 19.8% year-to-date decrease.
Upcoming Economic Reports
In the coming week, investors will be watching the November nonfarm payrolls or jobs report and the CPI report. Additionally, companies such as Micron, Nike, and Accenture will release their earnings reports.
Cannabis Reclassification Possible
In terms of government actions impacting stocks, there has been speculation that President Donald Trump might issue an order reclassifying cannabis from a Schedule I to a less regulated Schedule III drug. This potential move could significantly impact the cannabis industry, leading to a surge in related stock prices.
Following the news, several cannabis stocks experienced sharp increases, creating a bullish frenzy among investors. For example:
- Curaleaf Holdings rose 37.9%
- Tilray increased by 44%
- Canopy Growth climbed 53.9%
- Trulieve Cannabis surged 66.6%
- Green Thumb Industries gained 51%
Except for Tilray, which closed at $12.15, all other stocks were priced under $10.
GE Aerospace Gains Momentum
GE Aerospace received a boost after Citi initiated coverage with a buy rating and a price target of $386. The company’s stock increased by 3.9% on Friday, December 12, representing a 5% gain for the week and a 79% year-to-date gain.
Citi analysts are optimistic about the aerospace and defense sector, initiating coverage of about 24 stocks in this industry. They believe the sector faces “a number of megatrends” in defense, shipbuilding, space, and commercial aerospace.
AI Race: Broadcom and Oracle
Broadcom and Oracle, two major players in the tech sector, have significant investments in artificial intelligence (AI). However, their recent earnings reports did not meet expectations, causing their stock prices to fall. Despite this, analysts remain bullish on one of the two companies.
Oracle reported its F2 2026 earnings on Wednesday, December 10, with mostly positive results. Its stock fell by as much as 12% this week, missing Wall Street expectations slightly. The company announced $16.1 billion in revenue, a 14% year-over-year increase, with cloud revenues rising 34% to $8 billion.
However, Goldman Sachs analyst Kash Rangan lowered its price target to $220 from $320, citing modest revenue growth and concerns over capital expenditures and free cash flow burn.
On the other hand, Broadcom reported strong results, with $18 billion in revenue, a 28% year-over-year increase, driven by momentum across its infrastructure software and semiconductor businesses. Despite an 11% stock decline on Friday, December 12, its year-to-date stock gain remains strong at 55%.
Lululemon’s International Growth
While some tech stocks struggled, retail stocks like Lululemon performed well. After Jefferies upgraded Lululemon to “hold” from “underperform,” increasing its price target from $120 to $170, the company’s stock soared 9.6% on Friday, December 12.
This followed an announcement from Lululemon’s CEO, Calvin McDonald, who plans to step down in January 2026. The news came alongside the company’s Q3 2025 earnings report, which highlighted strong international revenue growth. While net revenue rose 7% to $2.6 billion, the company faced challenges in the Americas, where revenue declined by 2%.