This Week

The stock market took a breather last week, with the SPX tacking on a small gain after the prior week’s +5% surge. It was also the first real calm in a while, following weeks of volatility. That volatility was largely caused by shifting odds around this week’s Fed meeting, but it also reset in some of the frothier momentum trades of the year—especially around AI, and anything crypto. Now that the dust has settled a bit, the we enter this week pricing in a near-certain rate cut. However, how traders respond to the the FOMC’s tone into 2026 will likely determine whether we finish the year with a quiet grind higher or a reprise of the recent volatility. More on this week in a second but first a round-up of some stories from over the weekend:

• Crucial Fed decision looms as stocks fly high near records: What to watch this week (Yahoo Finance)

  • Stocks closed on Friday near record highs, with the S&P 500 sitting just below the 6,900 mark as a twitchy bond market looks ahead. A busy calendar will greet investors this week, with the last Fed meeting — and press conference from Chair Jerome Powell — of 2025 highlighting the action. On the corporate side, we have Wednesday circled, with Oracle (ORCL) and Adobe's (ADBE) quarterly results and Broadcom (AVGO) and Costco (COST) headlining the proceedings on Thursday.

• OpenAI goes from stock market savior to burden as AI risks mount (Bloomberg)

  • Wall Street’s sentiment toward companies associated with artificial intelligence is shifting, and it’s all about two companies: OpenAI is down, and Alphabet Inc. is up. The maker of ChatGPT is no longer seen as being on the cutting edge of AI technology and is facing questions about its lack of profitability and the need to grow rapidly to pay for its massive spending commitments. Meanwhile, Google’s parent is emerging as a deep-pocketed competitor with tentacles in every part of the AI trade.

• US Trade Chief Says China Has Complied With Terms of Trade Deals (Bloomberg)

  • Trade Representative Jamieson Greer said China has been complying with the terms of the bilateral trade agreements and that the US is constantly monitoring commitments made by China in a bid to maintain a stable trade relationship.

• Trump’s trade war shift away from Chinese manufacturing has reached tipping point (CNBC)

  • The proportion of supplier volume from manufacturing in China, Hong Kong, and Korea has declined from 90% to 50% over the past decade, according to Wells Fargo data. Indonesia, Vietnam, Thailand and India have all benefited from the longer-term diversification of supply chains that picked up during the first Trump administration and initial trade war and has intensified since. Even with a potential Supreme Court ruling against President Donald Trump’s tariffs possible, in the short-term, importers are facing a cash crunch as inventories frontloaded in 2025 run low and tariffs hit balance sheets.

• The New Private-Equity Billionaires Who Are Taking Over Wall Street (Barron’s)

  • Will the last old-school banker please turn out the lights? This past Monday night in a packed Times Square ballroom, some 2,000 attendees rose out of their seats to salute the latest lion of Wall Street, Marc Rowan, CEO of Apollo Global Management. It was the 50th UJA-Federation Wall Street Dinner, a signature fund-raising event in New York, which this year reaped some $57m, and where Rowan was lauded for his “visionary leadership” in philanthropy and business.

• 'Lowest-probability outcome': Netflix's $72 billion deal for Warner Bros. Discovery stuns Wall Street (Yahoo Finance)

  • Netflix’s (NFLX) $72 billion agreement to acquire Warner Bros.’ (WBD) studio and streaming assets has set off a high-stakes debate about whether regulators will allow the world’s largest streamer to get even bigger. The deal, which folds Warner Bros.’ film and TV studios, HBO, and HBO Max into Netflix’s global machine, immediately resets the competitive landscape. And it caught even seasoned Wall Street analysts off guard.

SPX options are pricing in just shy of a 1.5% move for this week. That’s slightly more than last week, and to the upside would mean new market highs in SPX. If we do get some volatility it’ll likely come later in the week. The Fed hits Wednesday afternoon, followed by Oracle earnings after the bell and Broadcom on Thursday. Implied vols could pick up into Wednesday:

This Week’s Expected Moves:

• SPX/SPY: 1.4% (6775-6975)

  • QQQ: 1.9%

  • IWM: 2.3%

  • TLT: 1.1%

  • USO: 2.6%

This week’s macro calendar is highlighted by Wednesday’s FOMC. As mentioned, a rate cut is a near certainty but the statement itself, and even more-so, Powell’s presser is critical:

Economic Calendar: 

• Tuesday

  • 8:15am - ADP Employment

  • 10am - JOLTS job openings

• Wednesday

  • 2pm - Fed Rate Decision

  • 2:30pm - Powell Presser

• Thursday

  • 8:30am - Initial Jobless Claims

• Friday

  • Fed Speak - Paulson, Hammack, Goolsbee

As for earnings, the big names this week are Oracle and Broadcom. Broadcom is basically an honorary member of the Mag7 at this point, so any meaningful move there could sway the broader indices by sheer market cap. Oracle may serve as a vibe check on the status of the euphoric action we saw a few months back. Costco will also be interesting Thursday evening.

Earnings (with expected moves):

• Monday

  • After-hours: TOL 5%

• Tuesday

  • Pre-market: AZO 4%, CPB 5%

  • After-hours: GME 8%

• Wednesday

  • Pre-market: CHWY 9.5%

  • After-hours: ORCL 10%, ADBE 7%, SNPS 7%

• Thursday

  • Pre-market: CIEN 12%

  • After-hours: AVGO 7%, LULU 10%, COST 3.5%, RH 12%

One last note: Plenty of investors are now positioned for the rally to carry into year end, but with the SPX less than 1% from all-time highs and about 2% from significant year-end overhead supply near SPX 7000, the risk/reward around a potential “sell the news” reaction is skewing a bit more top the downside. Most of that resistance above rolls off as we cross into the new year, though—which means if the market can get to that level into New Year’s, it could set up for a burst higher into January.

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