Stocks Stay Mixed as the Fed Lowers Rates:
Stocks ended last week mixed after a widely anticipated Federal Reserve decision on interest rates and a rotation into non-tech areas helped push the Dow higher, while the broader market and technology stocks lagged behind.
The S&P 500 Index declined 0.63%, while the Nasdaq Composite Index fell 1.62%. Meanwhile, the Dow Jones Industrial Average advanced 1.05%. The MSCI EAFE Index, which tracks developed overseas stock markets, rose 0.89%.1,2
Source: Bloomberg Finance, L.P. (Performance data normalized 12/05/25 = 0)
Market Rotation After Fed Decision
Stocks stayed in a fairly tight trading range over the first half of the week. Tech remained a strong spot on Monday despite slight to modest declines in all three major averages.3
By Tuesday’s close, all three major averages were slightly to modestly lower week-to-date as the Fed’s last interest-rate-setting meeting of the year approached.4
Then, on Wednesday morning, stocks rose ahead of the Fed’s announcement that it was lowering rates by a quarter percentage point—a widely expected move. By the close, all three major averages ended in the green.5,6
A market rotation theme dominated the rest of the week, as investors shifted into cyclical areas of the economy that are likely to benefit from an economic rebound. The Nasdaq ended Thursday’s session lower, while the S&P and Dow Industrials hit fresh record closes. The Russell 2000 Index of small-cap stocks also notched new closing highs.7
The rotation into value stocks continued on Friday, with some AI names coming under pressure. The financial, healthcare, and industrial sectors were among the groups that seemed to benefit from the rotation.8
Sources: U.S. Department of the Treasury, Board of Governors of the Federal Reserve System, Charles Schwab
No Surprise, Just Tea Leaves
Last week’s rate decision from the Federal Reserve was no big surprise. Speculators had already priced in this outcome weeks ago.
Now for reading the tea leaves: First, Fed Chair Powell stated in his press conference on Wednesday that they have ruled out a rate hike for the foreseeable future, but also noted that it would be a higher bar for further rate reductions. Another point was the degree of dissent: the vote was 9-3.9
Then on Friday, voting members who dissented expressed views on inflation and jobs, and which risk was the more important one to address through monetary policy.10
This Week: Key Economic Data
Source: Bloomberg Finance L.P.
This Week: Companies Reporting Earnings
Source: EarningsWhispers
Author
Gary Aiken
Chief Investment Officer
Concord Asset Management
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Footnotes and Sources
1WSJ.com, December 12, 2025
2Investing.com, December 12, 2025
3CNBC.com, December 8, 2025
4CNBC.com, December 9, 2025
5WSJ.com, December 10, 2025
6CNBC.com, December 10, 2025
7CNBC.com, December 11, 2025
8CNBC.com, December 12, 2025
9WSJ.com, December 10, 2025
10WSJ.com, December 12, 2025
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