EB Daily Market Report - Wednesday, December 10, 2025
Executive Summary
- Futures were mixed overnight, with most of our major indices opening lower
- We've seen some strength since the opening bell, although the more growth-oriented NASDAQ 100 ($NDX, -0.19%) lags and remains negative
- Large cap growth (IWF, -0.26%) trails large cap value (IWD, +0.67%) heading into the Fed decision, a theme that's been in place for several weeks
- Cryptocurrencies are mixed today, but most are well off highs established in October
- Commodities are mostly flat on the session, awaiting the Fed's next move
- 9 of 11 sectors are higher, though the all-important technology (XLK, -0.23%) group is one in negative territory
- Industrials (XLI, +0.88%) and health care (XLV, +0.76%) are intraday leaders
- GE Vernova (GEV, +14.35%) is the top performer in the S&P 500 after doubling its dividend, increasing its stock buyback, and raising its revenue and cash flow forecast
- Uber Technologies (UBER, -6.68%), unfortunately, is the worst S&P 500 performer as Morgan Stanley reduced its price target and regulatory pressure ratchets up in Europe
Market Outlook
The U.S. stock market is ultimately driven higher, or lower, by earnings and Fed policy. Earnings have been strong and that's been the primary driver behind the S&P 500 continuing its surge into record-high territory over the past 13-year secular bull market. As the Fed gets set to deliver a likely fed funds rate cut of 25 basis points, many of our major indices are on the cusp on new all-time highs. If everything else is considered equal, a rate cut increases stock valuations as future earnings and cash flow growth become more valuable. That helps to explain why U.S. stocks have been so strong since the 2022 cyclical bear market low - earnings have expanded and rates have dropped.
There is a balance that needs to be achieved, however. If earnings remain fairly robust and rates are cut as a result of inflation dropping, and widely considered under control, then cuts can result in a big move higher. But if the Fed waits too long to cut rates and Wall Street begins to sense a possible recession (the dreaded R word), then rate cuts won't help initially. Wall Street will revalue companies based on a drop in expected earnings.
So where are we right now? That's the million dollar question. Wall Street expects a rate cut, so it's important that the Fed deliver on those expectations. Beyond that, I'll be evaluating the market's response and rotation to figure out the story that's being told.
Sectors/Industries
Transportation stocks ($TRAN) have been screaming higher over the past 2-3 weeks, rising well over 10% during this period as many are rotating into the group, believing that lower rates will spur economic growth. Transportation companies deliver goods, so economic strength normally results in rising stocks in this area. Currently, truckers ($DJUSTK) and railroads ($DJUSRR) are at or approaching key price resistance levels. Check them out:
$DJUSTK:
$DJUSRR:
That's a TON of overhead resistance on railroads. A break above the key 3550-3650 resistance zone would be an extremely bullish signal for the economy in 2026.
ChartLists and Trading Strategies
There will be plenty of opportunities to trade in the weeks and months ahead, but this afternoon won't be one of them for me. I'm in "watch and see" mode. Obviously, I want to make sure that the Fed actually cuts rates today. But then I also want to review and evaluate the market's reaction over the next few days.
Upcoming Earnings
We are now waiting until Q4 earnings season kicks off in mid-January before publishing our Upcoming Earnings ChartLists and Upcoming Earnings Relative Strength ChartList.
Economic Reports
FOMC policy statement at 2:00pm ET
Happy trading!
Tom