Morning in New York: Fed to support bullish sentiment

Daily review and forecast of events on the U.S. stock market from Mikhail Denislamov, Deputy Director of Freedom Capital Markets Research.

No significant macroeconomic statistics are scheduled to be published this Friday, so trading participants will continue to assess the consequences of the December Fed meeting. The rate cut combined with the regulator's restrained rhetoric, higher GDP growth forecasts and absence of dramatic changes in inflation expectations creates a favorable background for the stock market. This configuration supports cyclical sectors and high beta securities, which corrected in November, as well as large beneficiaries of long-term development capital expenditures in the AI sector, for whom an additional rate cut increases the attractiveness of the growth premium.

An important event today will be the launch of the Fed's program of buying short-term Treasuries of about $40 billion monthly to manage market liquidity. Despite the formal resumption of the expansion of the regulator's balance sheet after the end of quantitative tightening, the new QE is technical in nature. Its purpose is to maintain sufficient reserve levels and effective control over the federal funds rate. Fed Chairman Jerome Powell emphasized that these measures are not associated with a change in the course of monetary policy and do not have a stimulative nature. Nevertheless, the market perceives the beginning of asset purchases as an additional factor of liquidity support.

Shares of Broadcom (AVGO) are down more than 5% in the premarket as its management kept its FY 2026 (FY) AI revenue growth guidance in the 40-60% range, although for FY 2025 it is up 65% with a first-quarter guideline in the 100% range. The CEO's comment about a $73 billion backlog for shipments over the next six quarters was received coolly by the market.

Market participants will continue to analyze the quarterly results of Oracle (ORCL), which collapsed its quotes on Thursday. If the drawdown starts to be redeemed, it may support the S&P 500 movement to a new record.

Futures on US indices demonstrate about zero dynamics. We assess the balance of risks for the upcoming trades as neutral with moderate volatility. We focus on S&P 500 fluctuations in the range of 6860-6950 points (from -0.6% to +0.7% of the previous session's closing level).

- Costco (COST ) beat expectations for first-quarter revenue and earnings thanks to strong demand ahead of the holiday season. Comparable sales rose 6.4% versus the forecast of 5.82%, and earnings per share reached $4.50 versus the expected $4.27. Despite the positive results, the retailer's stock is showing near-zero momentum in the premarket.

- Lululemon (LULU) quotes are adding over 9% before the opening of the main session, reacting to strong reporting. The company's quarterly revenue rose 7%, with sales in China up 46% despite weakening demand in the US and tariff pressure on margins.

- National security questions have arisen around Intel (INTC) after reports of the chipmaker testing equipment from ACM Research, a company with ties to China and units under U.S. sanctions, raising concerns among experts about the transfer of advanced technology.

Trading on December 11 on the U.S. markets ended mostly in the plus. S&P 500 grew by 0.21%, Dow Jones added 1.34%, Russell 2000 increased by 1.21%, only Nasdaq 100 decreased by 0.35%. The S&P Equal Weighted Index once again outperformed the capitalization-balanced benchmark. This signals an expansion of the rally beyond the tech giants.

As the day before, raw materials producers (XLB: +1.99%) were the leaders of growth. Technology sector (XLK: -0.51%) topped the list of outsiders due to disappointing results of Oracle (ORCL).

The "Magnificent Seven" companies, except for Microsoft (MSFT: +1.03%) as the main partner of OpenAI, ended the day in negative territory. After the presentation of the updated OpenAI GPT-5.2 model, Alphabet (GOOGL: -2.4%) shares came under pressure as investors are concerned about Google's competitive position in the generative AI segment.

The main drivers of the trading session were the Oracle report (ORCL) and more balanced than expected outcome of the December FOMC meeting. The weak Oracle report put pressure on the technology sector, especially on shares related to infrastructure for artificial intelligence.

The December Federal Open Market Committee meeting removed meaningful uncertainty ahead of a seasonally favorable period for equities. The rotation in favor of cyclical sectors continued amid anticipated fiscal stimulus, robust consumer spending, improved credit dynamics, and a rebound in capital markets activity.

The number of initial applications for unemployment benefits noticeably exceeded the revised figure of the previous week at the level of 192 thousand and the forecast of 213 thousand, reaching 236 thousand. At the same time, the number of repeated applications fell from 1932 thousand (revised from 1937 thousand) to the lowest since April 1838 thousand.

The Treasury completed its $119bn bond issuance with a $22bn auction of 30-year treasuries, which showed a cut-off price deviation of just 0.1bps. Demand and participation of foreign buyers were in line with recent trends.

-Walt Disney (DIS: +2.4%) announced a $1 billion investment in OpenAI: the company's characters and IP are planned to be used in Sora (video generation), which expands content monetization opportunities.

- An appeals court has partially granted Apple 's (AAPL) appeal against Epic Games, allowing the company to charge a reasonable fee on purchases outside its platform. The head of Epic Games welcomed the decision, saying it would prohibit Apple from charging "garbage fees" to developers.

- Plans to develop its own artificial intelligence chip to replace NVIDIA's solutions led to a decline in Rivian 's (RIVN: -6.1%) stock price amid investors' concerns about the high costs and risks of the project's realization.

- Ciena 's (CIEN: +9.3%) quarterly results beat expectations thanks to robust demand from cloud providers and growing opportunities in the data center segment. The company's forecasts for Q1 and FY 2026 were above consensus.

- Tesla (TSLA: -1.01%) sales fell 23% in November, to their lowest since January 2022, despite the launch of more budget-friendly versions of the Model Y and Model 3. The new variants are cannibalizing sales of premium versions, and the end of the tax credit program has crimped demand for electric cars.

This article was AI-translated and verified by a human editor