Morning in New York: investors expect restrained steps from the Fed

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

The main event this Wednesday will be the outcome of the two-day meeting of the Federal Open Market Committee (FOMC), in particular the updated macro forecasts and Jerome Powell's comments on the course of monetary policy for 2026. The consensus is for a 0.25pc cut in the key rate, to 3.5-3.75%. The probability of this, according to Polymarket and special futures data, is estimated at almost 100%.

Given the growing disagreements within the committee, we assume the prevalence of "hawkish" sentiments among the regulator's management. Some of its representatives may vote against a rate cut, arguing that the easing cycle has gone far enough and its continuation may lead to a new acceleration of inflation.

From Jerome Powell, the investment community expects statements on the upward revision of the rate cap and an explanation of the position of opponents of further monetary easing.

Post-Shutdown macro statistics continue to be released in a truncated fashion. BLS and unofficial survey data continue to show a lack of active hiring and large-scale layoffs. PCE inflation for September (2.8% y/y) remains above the Fed's target.

Chewy (CHWY) will report quarterly results before the open of major trading. Oracle (ORCL), Adobe (ADBE) and Synopsys (SNPS) will report at the post-market, whose figures will be an important test for the AI narrative. Against the backdrop of these three releases, sharp swings in the overall market cannot be ruled out. Options suggest a 10% move in Oracle stock in one direction or the other depending on the results. If the company's report will cause a positive reaction of investors, and the Fed will maintain a balanced tone of statements, we do not exclude the updating of historical highs of the main stock benchmarks.

Futures on US indices demonstrate about zero dynamics. We assess the balance of risks for the upcoming trades as neutral with increased volatility. We focus on S&P 500 fluctuations in the range of 6780-6910 points (from -0.9% to +1% of the previous session's closing level).

- Shares of Cracker Barrel (CBRL) reacted negatively to the quarterly report in the postmarket. Adjusted loss per share came in at $0.74 with a consensus of $0.68, while revenue fell 5.7% YoY to $797 million, with average guidance of $808 million. Comparable sales at chain establishments declined 4.7%, while retail sales fell 8.5%. Given the ongoing challenges, management lowered its full-year revenue guidance to $3.2-3.3 bln and adjusted EBITDA to $70-110 mln.

- Dave & Buster's (PLAY) posted a net loss of $42 million ($1.22 per share) on revenue of $448 million (consensus: $462 million) in the third quarter. The company's comparable sales declined 4% YoY and adjusted EBITDA was $59 million with a margin of 13%. The stock reacted neutrally to the release. Management continues to focus on new game launches, expansion through 11 new U.S. locations and four international franchises granted this year.

- Quotes GameStop (GME) fell more than 5% after the end of the main session amid the publication of a weak report for the third quarter. The company reported earnings per share of $0.13 with average expectations of $0.18, while revenue fell from last year's $860 million to $821 million with a consensus of $894 million. The company cut SG&A expenses from $282 million to $221 million, allowing it to generate an operating profit of $41 million versus a loss a year ago.

The trades on December 9 on the U.S. markets ended mixed. S&P 500 decreased by symbolic 0.09%, NASDAQ 100 grew by 0.16%, Dow dropped by 0.38%, and Russell 2000 grew by 0.21%.

The energy (XLE: +0.62%) and technology (XLK: +0.26%) sectors, as well as producers of consumer staples (XLP: +0.23%) looked better than the market as a whole. Moderately negative dynamics was recorded in the healthcare industry (XLV: -0.97%) and industrials (XLI: -0.73%).

Leading the gains in the Magnificent Seven were Tesla (TSLA: +1.27%) and Alphabet (GOOGL: +1.07%).

JOLTS openings for October totaled 7.67 million with a consensus of 7.12 million. The layoff rate fell to 1.8%, the lowest since Ma 2020. The ADP estimate points to the private sector adding an average of 4.75k jobs per week after declines in the three previous similar periods. The NFIB Small Business Confidence Index for November rose to 99 points, but labor quality issues remain a major constraint for companies.

- J.P. Ma (JPM: -4.7%) warned that fee growth in the investment banking segment for the current quarter will be below market expectations, while operating expenses will rise to $105 billion in 2026 from $95.5% billion in 2025. Management pointed to the volatility of the macroeconomic environment, noting the relative stability of consumption, despite signs of cooling labor market.

- Microsoft (MSFT: +0.2% ) announced plans to invest $17.5 billion in cloud as well as AI infrastructure in India over the next four years. The funds will be used to expand data center capabilities, integrate AI into government platforms, and develop human resource competencies. The company will also scale cloud services in the country and is looking to train 20 million AI professionals by 2030.

- Teleflex (TFX: +9.5%) plans to sell three business segments for $2.03 billion and use the bulk of the proceeds for a $1 billion buyback, sharpening its focus on higher-margin segments.

- The contract with the Centers for Medicare & Medicaid Services was the main catalyst for Clear Secure (YOU: +8.2%) quotes as the CLEAR1 platform will be integrated into Medicare.gov to modernize the identification system starting in 2026.

- Subdued results for the first quarter of fiscal 2026 caused Ferguson's (FERG: -8.1%) stock price to plummet. Management noted a challenging operating environment, and high market expectations amid 40% growth over the previous year added pressure on the company's capitalization.

- The privatization deal was a key event for Alexander & Baldwin (ALEX: +37.7%). The buyer offered to buy the company at $21.2 per share, which implies a premium of about 40%. The value of the deal, which is expected to close in the first quarter of next year, is estimated at $2.3 billion.

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