Markets End the Week Mixed Following Fed Meeting and Tech Earnings Volatility

Markets End the Week Mixed Following Fed Meeting and Tech Earnings Volatility

It was a volatile week for markets, as an initial positive reaction to the FOMC meeting was followed by renewed uncertainty tied to earnings releases from several AI-related companies, which reignited concerns around the AI trade. Global equities, as measured by the MSCI ACWI, finished the week down 0.16%, while domestic large-cap stocks, measured by the S&P 500, declined 0.61%. Small-cap equities, measured by the Russell 2000, outperformed as a clear beneficiary of the Fed’s decision, given their greater sensitivity to interest rate movements, gaining more than 1% for the week.

FOMC Meeting

The Federal Reserve concluded its final meeting of the year by delivering a widely expected 25 basis point cut, bringing the federal funds target range to 3.50%–3.75%, though the decision was notably divided with three dissenting votes, the first such split in six years, as policymakers balanced inflation concerns against emerging risks to the labor market, and while Chair Powell struck a less hawkish tone by signaling rates are near neutral and the Fed can afford to be patient, he also highlighted downside labor market risks and announced plans to begin purchasing shorter-term Treasury securities as needed to support liquidity and maintain ample reserves.

U.S. Labor Market

Initial jobless claims jumped to 236,000 for the week ending December 6, the highest level since early September, while continuing claims fell to 1.838 million, and separate data showed mixed labor dynamics in October, with job openings rising to a five-month high, layoffs increasing, hires declining, and the quits rate falling to its lowest level since 2020, suggesting workers may be growing more cautious about changing jobs.

Markets Rotate as Tech Lags and Value

Weekly performance reflected a clear market rotation, as technology stocks that have led gains in 2025 weighed on broader indexes while more cyclical, value-oriented stocks advanced, with a large-cap value benchmark rising 0.6% for the week as its growth counterpart fell 1.5%, and small-cap stocks continued to show strength, as a U.S. small-cap benchmark reached a record high on Thursday before pulling back on Friday, still finishing the week up roughly 1.2% after surging more than 12% over the prior 15 trading days.

Looking Ahead

For the week ahead, key data releases include inflation, PMI, housing, and retail sales.

As Always

I’d like to leave you with the final line we’ve used since we started these commentaries back at the very height of market volatility in March 2020. Always remember that we create financial/investment plans not for the easy times, but to prepare for the tough ones.