US stock outlook | Futures on the three major stock indexes fell sharply, and the Fed's interest rate decision hit hard

1. On December 10 (Wednesday), the futures of the three major US stock indexes fell sharply before the US stock market. As of press release, Dow futures were down 0.12%, S&P 500 futures were down 0.12%, and NASDAQ futures were down 0.22%.

2. As of press release, the German DAX index fell 0.40%, the French CAC40 index rose 0.27%, the UK FTSE 100 index fell 0.27%, and the European Stoxx 50 index fell 0.16%.

3. As of press release, WTI crude oil rose 0.58% to $58.59 per barrel. Brent crude rose 0.48% to $62.24 per barrel.

Market news

The Federal Reserve is about to have a showdown! There is no doubt that interest rates will be cut by 25 basis points tonight, but the “hawkish” statement may become the main theme. The Federal Reserve will announce the latest interest rate decision at 3 a.m. Beijing time on Thursday. After a period of obvious hesitation about the direction of the Federal Reserve's decision, the market is now basically convinced that the Federal Reserve will cut interest rates by 25 basis points for the third time in a row, reducing the federal funds rate to 3.5%-3.75%. But it's not that simple. The Federal Open Market Committee of the Federal Reserve is experiencing serious internal divisions. Some members support cutting interest rates to prevent further weakening of the labor market, while others believe that easing is sufficient, and continued interest rate cuts may increase inflation. Because of this, “hawkish interest rate cuts” have become a popular statement at this policy meeting. In market terms, this means that although the Federal Reserve will cut interest rates, it also sends a signal — no one should expect the next rate cut to come soon.

Did Hassett's promise of a “quick interest rate cut” change the picture? Expectations of interest rate cuts fell sharply, and global long-term treasury bond yields soared to a 16-year high. On the eve of the Federal Reserve's key policy meeting, global bond yields have risen to the highest level since 2009, indicating market concerns that the cycle of interest rate cuts from the US to Australia may be coming to an end. An index that measures long-term government bond yields has rebounded to a 16-year high, and money market bets have further strengthened this sentiment. Traders' current pricing shows that it is almost impossible for the ECB to cut interest rates further. At the same time, it is almost certain that the Bank of Japan will raise interest rates this month, and it is expected that the Bank of Australia will raise interest rates by 25 basis points twice next year. Even in the US, where the Federal Reserve is expected to cut interest rates this week, the market outlook is evolving rapidly. As investors reassess the prospects for monetary policy, inflation, and fiscal discipline, 30-year US Treasury yields have climbed to multi-month highs.

Relaxed expectations cool down before the December meeting! Bond traders are betting on “shrinkage”: the Federal Reserve will cut interest rates only 2 times next year. Bond traders are betting that the Fed will cut interest rates more slowly over the next year. This is part of a global trend of betting that the Fed will slow down or stop monetary easing. In addition to the 25 basis point rate cut expected on Wednesday, futures and options trading shows that traders now expect the Federal Reserve to cut interest rates by a total of 50 basis points in 2026, most of which will be concentrated in the first half of this year. This is the complete opposite of how the interest rate swap market expected to cut interest rates nearly three times next year a week ago. Similar hawkish sentiment quickly reignited in economies such as Australia, New Zealand, and recently Canada and the Eurozone. This shift occurred before key labor market data began to be released, and the report was delayed until next week. These data are likely to determine whether the market's current views on the Federal Reserve will continue.

Are the four Federal Reserve governors afraid they will be collectively ousted? Trump: If confirmed, leave no one! US President Trump hinted that if the US Federal Reserve governor appointed by former President Joe Biden's letter of appointment was signed by an automatic signature machine, he might seek his removal. This is his latest move to try to strengthen control over the central bank. However, the move is unlikely to succeed. Trump previously claimed that he wanted to revoke the executive order signed by Biden using an automatic signature machine. Other than being spectacular, the results had little effect. Any attempt to annul appointments approved by the Senate will almost certainly be legally challenged by the appointees. Despite this, this statement represents Trump's latest intrusion on central bank independence. Trump said at a political rally in Pennsylvania: “I've heard that automatic signers may have signed those letters of appointment. If it were an automated signer — maybe I made a mistake, but we'll figure it out.”

Musk admits that he regrets “crossing the border” in politics: although 100 billion “zombie payments” were blocked, he would definitely say no to it again. Tesla (TSLA.US) and SpaceX CEO Elon Musk recently said that the US White House Department of Government Efficiency (DOGE) — a new agency established at the beginning of President Trump's second term — has achieved only “limited” results in cutting the federal government's inefficient spending; if he can choose again, he will never get involved in this work again. While attending the podcast, Musk revealed that the department stopped what he called “zombie payments,” that is, federal spending that lacked reasonable project coding and a basis for using funds. “We have made some progress, which has had some results,” Musk admits. “In fact, we have cut off a large amount of meaningless and simply wasteful capital investment.

Individual stock news

Zhiwen Group (MOMO.US)'s Q3 revenue fell slightly by 0.9%, putting pressure on net profit. Zhiwen Group recorded net revenue of RMB 2,650.1 billion in the third quarter of 2025, down 0.9% year on year. Net profit attributable to the Group fell to 348.9 million yuan, compared to 449.4 million yuan in the same period last year; under non-US GAAP, net profit attributable to the Group was 404.5 million yuan, down from 493.3 million yuan in the same period last year. ADS diluted net income per share was 2.06 yuan, compared to 2.46 yuan for the same period last year; non-GAAP ADS diluted net income per share was 2.38 yuan, compared to 2.70 yuan for the same period last year. In terms of user size, as of the end of this quarter, the total number of paid users of the Momo App was 3.7 million. Although it was an increase of 200,000 over the previous quarter, there is still a significant gap compared to 6.9 million in the same period last year; Exploration Pay users remained at 700,000, the same as the previous quarter, but a decrease of 200,000 from the same period last year.

With 100 billion dollars of debt and computing power, Oracle (ORCL.US)'s “AI Gamble” will reach a ruling tonight. Although the stock price plummeted 23% in October, the worst monthly performance since 2001, Oracle has risen more than 30% so far this year. The stock price rebounded in November. As of Tuesday, the increase was close to 10% since December. As the company is about to release its second-fiscal quarter earnings report after the market on Wednesday, management and the new CEO are under increasing pressure to prove that Oracle can continue to fund the company's ambitious infrastructure plans, while also convincing Wall Street that the story of ultra-rapid growth driven by artificial intelligence still holds true. According to the data, analysts on average expect the company's Q2 revenue to be $16.22 billion, up 15.4% year over year, and non-GAAP earnings per share of $1.64, up 11.6% year over year.

J.P. Morgan Chase (JPM.US) warns that next year's costs will exceed 100 billion dollars, “frightening” the market to the biggest decline in eight months. J.P. Morgan Chase's Marian Lake said the bank expects spending to reach $105 billion next year. This outlook exceeded analysts' expectations and caused its stock price to fall on Tuesday. Lake said at a Goldman Sachs Group meeting on Tuesday that the biggest driver of expected cost increases is “expenses associated with business volume and growth.” She also pointed out strategic investments and the “structural impact of inflation”. On Tuesday, J.P. Morgan's stock price in New York fell 4.7% to $300.51, the biggest drop in eight months. This makes the bank the worst performing constituent stock in the KBW Bank Index. This guidance was even higher than analysts' highest expectations and surpassed the average estimate of $101.1 billion. The cost of around $105 billion will also be about 9% higher than analysts' expectations for 2025.

Intel (INTC.US) was reduced by 140 million euros by the European Court of Justice: the previous record fine has been reduced again. Intel successfully cut the remaining amount of an EU antitrust fine by nearly 140 million euros (about 163 million US dollars). The initial amount of this fine was a record. A judge of the EU General Court of Justice in Luxembourg upheld the European Commission's 2023 decision that Intel is abusing its market power in the chip market. However, the judge said the fine should be further reduced from the 376.3.6 million euros previously imposed by the supervisory authority — the fine itself was previously drastically reduced by another court ruling. In its April 30 judgment, the court stated that the reduced fine amount was approximately 237.1 million euros, “which more appropriately reflects the seriousness and duration of the relevant infringement”. The European Commission, the EU's antitrust enforcement agency, said it would “carefully study the content of the judgment and evaluate the possibility of next steps”.

Nvidia (NVDA.US) plans to introduce chip “location tracking” technology to strictly prevent the smuggling of high-end AI chips. According to people familiar with the matter, Nvidia has successfully developed a location verification technology that can track the country where its chips are actually operating in real time. This move may help prevent its artificial intelligence (AI) chips from being smuggled into countries subject to export bans. The person familiar with the matter mentioned above said that the feature was recently demonstrated internally and has not yet been officially released. It is planned to be installed by customers as a software option in the future. The technology will invoke the “confidential computing” capabilities of Nvidia's graphics processing units (GPUs) to implement positioning functions. An Nvidia executive said that the original purpose of the software's core design is to provide customers with a tracking service for the overall computing performance of the chip — this is also a common monitoring requirement for data centers when purchasing processors on a large scale.

$35 billion spent in five years! Amazon (AMZN.US) is increasing its investment in India, focusing on business expansion and the three strategic pillars. Amazon has pledged to invest $35 billion in India over the next five years to increase investment in this critical growth market. According to reports, Amazon has invested nearly 40 billion US dollars in India. The new investment will focus on business expansion including rapid e-commerce and cloud computing, as well as the three strategic pillars — AI-driven digital transformation, export growth, and job creation. This huge investment by 2030 will help create an additional 1 million jobs in India. For large US internet companies such as Amazon and Google (GOOGL.US), India, the most populous country, is still a high-growth market despite regulatory hurdles and fierce local competition.

Key economic data and event forecasts

23:30 Beijing time: Changes in US EIA crude oil inventories for the week ending December 5 (10,000 barrels).

00:00 a.m. Beijing time the next day: US IPSOS main consumer sentiment index PCSI for December.

The next day at 03:00 a.m. Beijing time: The Federal Reserve's FOMC announced interest rate decisions and a summary of economic expectations.

The next day at 03:30 a.m. Beijing time: Federal Reserve Chairman Powell held a monetary policy press conference.

Performance Forecast

Thursday morning: Oracle (ORCL.US), Adobe (ADBE.US), Synopsys (SNPS.US)

Thursday pre-market: Ciena (CIEN.US)