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This article was written by Eamonn Sheridan at www.forexlive.com.

The major US stock indices fell sharply after the Fed signaled less easing in 2025. The end of your target for the Fed funds is now 3.9%. It was a 3.4% after the September meeting.

• The Dow industrial average is now down for 10 consecutive days. It’s decline for today is its worst single day since August 5 when the index fell -2.6%. The fall today was just above that level
• The S&P index fell at its worst day also since August 5 when the index fell -3.0%.
• The NASDAQ index had its worst day since July 24 when the index fell -3.64%

A snapshot of the final numbers shows:

• Dow industrial average fell -1123.46 points or -2.58% at 42326.44
• S&P index fell -178.58 points or -2.95% at 5872.04.
• NASDAQ index fell -716.37 points or -3.56% and 19392.69..

The small-cap Russell 2000 fell 1 or 2.56 points or -4.39% at 2231.51.

After the close Micron Technology EPS came in at $1.79 versus $1.77. Revenues were at $8.7 billion is expected $8.7 billion. Although earnings and revenues came in as expected the stock is getting hit hard and down -16.80%. That comes after its shares fell -4.33% on the day.

Guidance for Q2 was light of expectations with revenues at 7.7 – $8.1 billion versus expected $8.99 billion. Adjusted earnings-per-share expected $1.33– $1.53 versus expected $1.92. The company said they expect to return to growth in second half of the fiscal year.

This article was written by Greg Michalowski at www.forexlive.com.

I get the question a lot, “What time is the Bank of Japan announcement due?”

The answer is always the same, the BoJ doesn’t have a scheduled time for their Statement, never do.

Experience indicates to expect it sometime in the 0230 – 0330 GMT (2130-2230 US Eastern time) time window.

Bank of Japan Governor Ueda will follow up with a press conference. This is scheduled. At 0630 GMT (0130 US Eastern time).

The BoJ is widely expected to leave rates on hold today.

Earlier previews:

• BOJ is expected to hold its policy rate at 0.25% in its December 18-19 meeting – preview

• BOJ reportedly sees little cost to waiting for next rate hike
• BOJ reportedly erring towards keeping interest rates unchanged
• BOJ reportedly considers skipping rate hike
• BOJ to raise interest rate to at least 0.50% by end-March, 51 of 52 economists say
• Goldman Sachs expect the Bank of Japan to remain on hold at 0.25% at the December meeting

• This snapshot from the ForexLive economic data calendar, access it here.
• The times in the left-most column are GMT.
• The numbers in the right-most column are the ‘prior’ (previous month/quarter as the case may be) result. The number in the column next to that, where there is a number, is the consensus median expected.
• I’ve noted data for New Zealand and Australia with text as the similarity of the little flags can sometimes be confusing.

This article was written by Eamonn Sheridan at www.forexlive.com.

• The Federal Reserve cuts rates by 25 basis points, as expected. Dollar higher on dots
• FOMC full statement for December 2024 meeting
• FOMC December 2024 dot plot and central tendencies of economic forecasts
• Powell opening statement: Inflation is much closer to 2% goal
• Powell Q&A: Today was a ‘closer call’ but we decided it was the right call
• Atlanta Fed GDPNow growth estimate for Q4 rises to 3.2% from 3.1% previously
• EIA weekly US oil inventories -934K vs -1635K expected
• Canadian home prices rise 0.6% in November
• US Q3 current account -$310.8 billion versus -$284.0B estimate
• US November housing starts 1.289m vs 1.343m expected

Markets:

• Gold down $53 to $2592
• WTI crude oil flat at $70.10
• US 10-year yields up 11 bps to 4.49%
• S&P 500 down 2.4% in the worst day of the year
• Russell 2000 down 5%
• USD leads, AUD lags

I mean, it wasn’t that hawkish.

Everyone was talking about a hawkish cut from the FOMC today and that’s exactly what we got. The statement itself was largely a non-event as a couple of words highlighting the ‘timing and extent’ of further changes in rates was added and Hammack dissented (she doesn’t vote next year).

What really got the market’s attention was the dots, which showed about 1 fewer cut than anticipated in 2025 and 2026. Given the Fed’s commentary, that’s highly conditional on data and should have been a big mover. What did get some more attention and perhaps cracked markets was Powell, particularly a line where he said that inflation forecasts from September had “kind of fallen apart”.

It was part of a broader shift in his comments back to more emphasis on inflation falling rather than keeping the employment market strong.

My inclination is that this market move isn’t just about Powell’s hawkish turn but rather about Trump’s. In an interview with Fox he said he was ‘totally against’ the bill that would prevent a government shutdown and that’s after some real harsh words from Elon Musk.

The market has been thinking that Trump would prioritize the stock market and that would tilt the government towards larger deficits but now he’s picking a fight with a bill that’s already written and aims to keep the government open.

What doesn’t quite make sense is why the long end is selling off on this. A more-hawkish Fed and fiscally-responsible Washington points to lower inflation and less spending. Both of those should weigh long-dated rates.

This article was written by Adam Button at www.forexlive.com.

Tesla has been the big winner of the US election so far, rising 70% from election night. But the spell on the equity market may have cracked today.

Shares hit a fresh record at $488.54 shortly after the US equity open today but have since reversed hard and are now down nearly 11% and are the worst performing large-cap on the Nasdaq. If it closes here, this would also paint a three-candle reversal on the chart.

Worsening the decline may have been a report yesterday that Trump’s transition team plans a ‘sweeping rollback’ of EV and emissions plans, including eliminating federal plans to buy EVs for both civilian and military uses and instituting tariffs on “EV supply chain” imports including batteries, critical minerals and charging components.

While all this is happening, Elon is playing politics.

This article was written by Adam Button at www.forexlive.com.

AUD/USD has dipped below the 2023 intraday low of 0.6270 after the Federal Reserve interest rate decision. The Fed cut rates by 25 basis points, as expected but the dot plot forecast for 2025 rose to 3.9% from 3.4%. Most market watches were expecting 3.6% or 3.7%.

That’s kicked off a broad round of US dollar buying that pushed AUD/USD below the 2023 and down to the worst levels since 2022.

The next level of support is the 2022 low of 0.6170, which is roughly 1 cent away.

This article was written by Adam Button at www.forexlive.com.

The major European indices are closing the day marginally higher. The gains were led by the France’s CAC, Spain’s Ibex and Italy’s FTSE MIB.

The final numbers show:

• German DAX, +0.07%
• France’s CAC +0.26%
• UK’s FTSE 100 +0.05%
• Spain’s Ibex +0.26%
• Italy’s FTSE MIB +0.25%

As London/European traders had for the exits, and the Fed rate decision is forthcoming, the major US indices are also marginally higher on the day:

• Dow industrial average +0.37%
• S&P index +0.21%
• NASDAQ index +0.19%
• Russell 2000+0.24%

A rising the Dow industrial average today would be the first after nine straight days of declines (largest string since 1978).

Looking at the US debt market, yields are mixed:

• 2-year 4.234%, -0.7 basis points
• 5-year yield 4.255%, +0.7 basis points
• 10 year yield 4.402%, +1.8 point basis points
• 30 year yield 4.600%, +2.1 basis points

This article was written by Greg Michalowski at www.forexlive.com.

The Atlanta Fed GDPNow growth estimate for Q4 rises to 3.2% from 3.1% after the housing starts data released earlier today.

In their own words:

The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the fourth quarter of 2024 is 3.2 percent on December 18, up from 3.1 percent on December 17. After this morning’s housing starts report from the US Census Bureau, the nowcast of fourth-quarter real residential fixed investment growth increased from 4.7 percent to 5.3 percent.

The next GDPNow update is Friday, December 20. Please see the “Release Dates” tab below for a list of upcoming releases.

At the end of 2023, the Fed forecast that GDP for 2024 would slow to 1.4%. The growth rate has exceeeded those estimates as the economy continued to hum along. In September, the Fed forecase 2025 growth to come in at 2.0%.

Today the Fed will release their forecast for GDP, Unemployment, and PCE inflation (headline and core). They will also forecast the end of year Fed Funds guesstimate. In September they forecast an additional 100 bps of cuts in 2025. The expectatation is for that forecast to be something less.

This article was written by Greg Michalowski at www.forexlive.com.

Historically, the best single day to own stocks is any day that the Federal Reserve is making a decision.

Many in the market are worried about a hawkish Powell today once again but during his term he’s proven over and over that he is more-inclined to be dovish.

Eyes today will be on the dots, which are likely to take away a dot or two. That’s already priced in and well-understood in the market. The fear is that Powell outright promises to hold or even hints at future hikes.

The reason that’s unlikely is because the Fed doesn’t know what’s coming from Washington. Trump says many things and the market takes few of them seriously but the range of possibilities in terms of tariffs and retaliation is still wide. Further, anything could happen in Ukraine.

Powell will want to keep his options open and that’s most-likely to sound dovish.

At last, the S&P 500 was up 0.3% and the Dow was up 0.5% as it tries to shake off a nine-day losing streak.

This article was written by Adam Button at www.forexlive.com.

• Gasoline +2348K vs +2060K exp
• Distillates -3180K vs +661K exp
• Refinery utilization -0.6% vs -0.2% exp

Private oil data released late yesterday:

• Crude -4700K
• Gasoline +2400K
• Distillates +700K

Ahead of the data, WTI crude oil was up 82-cents to $70.90, having erased all of the decline on Tuesday.

This article was written by Adam Button at www.forexlive.com.

The major US stock indices are opening little changed on the day. Yesterday, the major indices all fell with the Dow industrial average falling for its ninth consecutive day – mainly on the declines from UnitedHealth and Nvidia over that period which saw their prices decline by over 20% and over 10% respectively.

A snapshot of the major indices currently shows (2 minutes into the open):

• Dow industrial average up 66.82 points or 0.15% at 43516.72.
• S&P index -3.3 points or -0.05% at 6047.31.
• NASDAQ index -25.52 points or -0.13% at 20083.54

The small-cap Russell 2000 is up 11.89 points or 0.51% at 2345.97.

• Nvidia, +2.74%
• Microsoft, -1.33%
• Amazon, -0.74%
• Meta, unchanged
• Alphabet, -0.64%
• Apple, -0.49%
• Tesla, -3.32%

This article was written by Greg Michalowski at www.forexlive.com.

• Composite Index up 0.6% m/m, accelerating from October’s 0.4%
• Year-over-year increase of 2.4%, up from 1.4% in October
• Prices have gained 2.2% since BoC’s first rate cut in June

Year-over-year standouts:

• Quebec City: +11.8%
• Calgary: +9.8%
• Montreal: +6.8%
• Victoria: -1.3%
• Toronto: -0.3%

This article was written by Adam Button at www.forexlive.com.