The stock market captured solid broad-based gains this afternoon following the FOMC's decision to reduce the federal funds rate by 25 basis points, snapping a streak of muted sessions and moving the S&P 500 (+0.7%), Nasdaq Composite (+0.3%), and DJIA (+1.1%) within close proximity of their all-time highs. The Russell 2000 (+1.3%) captured record highs of its own as small-cap stocks, with their increased domestic presence and sensitivity to borrowing costs, surged in reaction to 

The market was largely expecting the FOMC to deliver a "hawkish cut" at today's meeting, meaning that a rate reduction was anticipated alongside commentary that would dampen expectations of further easing. 

Indeed, the Summary of Economic Projections (SEP) showed a median expectation of just one rate cut in 2026, unchanged from the September SEP. However, the SEP also showed an upward revision in the median estimate for the change in real GDP to 2.3% from 1.8%. Meanwhile, the median estimate for the unemployment rate held steady at 4.4%, as the outlook for PCE inflation was revised down to 2.4% from 2.6%.

While the FOMC may now embrace a "wait-and-see" approach, as noted by Fed Chair Powell's comment, "the Fed funds rate is now within a broad range of estimates of its neutral value," optimistic revisions to the economic outlook, in tandem with an expressed willingness to make policy decisions on a meeting-by-meeting basis, invite questions as to just how hawkish today's meeting truly was. 

Today's decision also featured an announcement that the Fed will begin purchasing Treasury bills, starting December 12, to the tune of $40 billion per month before likely being "significantly reduced" after a few months, noting that reserve balances have declined to ample levels.

The stock market certainly benefitted from the more dovish than expected tilt, with the major averages capturing solid gains after a morning spent in a mixed fashion near their unchanged levels. 

Nine S&P 500 sectors finished higher, with six notching gains of 1.0% or wider. A smattering of corporate news items contributed strength to several of the top-performing sectors. 

The industrials sector (+1.8%) finished at the top of the leaderboard, supported by shares of GE Vernova (GEV 722.97, +97.67, +15.62%) rallying after the company issued upbeat guidance and provided an optimistic long-term financial outlook.

The consumer discretionary sector (+1.5%) was another top mover, garnering the bulk of today's mega-cap strength due to solid gains in Amazon (AMZN 231.78, +3.86, +1.69%) and Tesla (TSLA 451.44, +6.27, +1.41%). 

Homebuilder names, which are sensitive to borrowing costs, added support, with the iShares U.S. Home Construction ETF gaining 3.2% today. 

Banking names lifted the financials sector (+1.1%) to a nice gain, with JPMorgan Chase (JPM 310.17, +9.66, +3.21%) mounting a solid rebound from yesterday's 4.6% slide. 

Elsewhere, the materials (+1.8%), health care (+1.5%), and energy (+1.1%) sectors round out today's top performers. 

While losses in Microsoft (MSFT 478.76, -13.26, -2.70%) and NVIDIA (NVDA 183.74, -1.23, -0.66%) limited gains in the information technology sector (+0.1%), solid participation across a majority of its components helped the sector recover from a loss of nearly 1.0% this morning. Oracle (ORCL 223.30, +1.78, +0.80%) ended with a modest gain ahead of its earnings release this afternoon despite spending the bulk of the session in negative territory.

Only the defensive utilities (-0.1%) and consumer staples (flat) sectors failed to notch a gain today. 

All told, today's FOMC decision delivered on the promise of a rate cut, while Fed Chair Powell's emphasis on a meeting-by-meeting approach and his comment that a rate hike is not in anyone's base case conveyed a surprisingly dovish tone that helped lift risk sentiment and support solid growth across stocks today. Still, investors will have plenty to monitor on the policy front going forward, as today's decision featured two dissenters (Chicago Fed President Austan Goolsbee and Kansas City Fed President Jeffrey Schmid), while a new Fed Chair, likely one with an initiative to lower interest rates, will take the helm in May.

U.S. Treasuries climbed on Wednesday, snapping a four-day skid in the 10-year note and shorter tenors. The 2-year note yield settled down four basis points to 3.57%, and the 10-year note yield settled down two basis points to 4.16%

• Nasdaq Composite: +22.5% YTD
• S&P 500: +17.1% YTD
• Russell 2000: +14.8% YTD
• DJIA: +13.0% YTD
• S&P Mid Cap 400: +7.7% YTD

Reviewing today's data:

• Compensation costs for civilian workers increased 0.8% (Briefing.com consensus: 0.9%), seasonally adjusted, for the 3-month period ending in September 2025. That was a moderation from the 0.9% increase registered in the second quarter.
  • The key takeaway from the report is that it was an inflation-friendly report, evidenced by wages and salaries decelerating on a year-over-year basis for civilian workers (3.5% vs 3.9% a year ago), private industry (3.6% vs 3.8% a year ago), and state and local government workers (3.5% vs 4.6% a year ago).
• The U.S. Treasury reported a $173.0 bln deficit for November (Briefing.com consensus -$223.4 bln) after a deficit of $284.0 bln in October.
• The weekly MBA Mortgage Index rose 4.8% to follow last week's 1.4% decrease. The Refinance Index jumped 14.3% while the Purchase Index was down 2.4%.