Good morning, investors. Investors made their reaction to the Fed decision loud and clear, though their enthusiasm pared back on an AI update that could ultimately move asset prices more in the near term than the central bank.

The Federal Reserve cut interest rates again but central bankers remain torn on the best path forward.

Investors don’t seem to mind the disagreement.

As expected, the Fed lowered rates by 25 basis points on Wednesday, though policymakers came to the decision with an unusual, albeit unsurprising, lack of unanimity. 

Three officials dissented against the decision, with Stephen Miran vying for a double-sized cut, while Austan Goolsbee and Jeffrey Schmid voting for no adjustment at all. 

The last time the Fed saw three dissenting votes was in 2019.

Before that was 2011, and then back to 1992.

In any case, investors cheered the decision, split vote and all.

The S&P 500 rallied 0.7% for one of its best FOMC days in the last year.

“The market got the cut it wanted and although a January cut isn’t the base case, by no means did they put cold water on that potential move,” said Ryan Detrick, chief market strategist at Carson Group.

“Then the cherry on top was a stronger forecasted economy next year, never something we’d consider a bad thing.”

Notably, too, the equal-weight S&P 500 nearly doubled the market cap-weighted benchmark index, which underscores the breadth of the rally.

Indeed, Fed Chair Jerome Powell gave markets plenty of reason for optimism: 

Powell did say, however, payroll growth is likely being overstated by 60,000 jobs per month, which would imply the economy has been shedding about 20,000 jobs a month since May.

Nonetheless, as Opening Bell Daily readers know, the last 22 times the Fed has lowered rates with the S&P 500 within 2% of record highs, stocks have been higher 12 months later 100% of the time.

Add that to a still-accelerating AI trade, rising earnings growth and fiscal stimulus from the Big Beautiful Bill and it’s becoming increasingly difficult to map out the bear case for 2026.

Oddly, Wall Street maintains an altogether vanilla outlook on average for the year ahead, as we covered earlier this week.

The mean estimate for 12-month forecasts falls right in the 10% range, roughly matching the historical return of the S&P 500 since 1950.

The market’s indifference to the Fed’s internal split and succession drama effectively signals its confidence in falling interest rates and rising asset prices. 

Not only are investors pricing in an outlook that no longer includes the most persistent headwind of the last several years — restrictive monetary policy — but they are positioning for a regime that actively works in the opposite direction.

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📉 Oracle stock dropped 11% on weak earnings. A key barometer for the AI trade, the revenue miss dragged down peers like Nvidia and CoreWeave. That said, Oracle picked up commitments from Meta and Nvidia during the quarter. (CNBC)

📺 President Trump said the Warner Bros. deal should include CNN. He said he would oppose a deal that doesn’t include new ownership for the legacy news network: “It should be guaranteed and certain that CNN is part of it or sold separately.” (Bloomberg)

⚡ China’s advantage in the AI race is in its massive electric grid. It has the largest grid by a landslide, and over the last 15 years it’s power production has increased by more than the rest of the world combined. (WSJ)

🗓 December 11, 2008: Law enforcement arrested Bernie Madoff in New York. The SEC filed fraud charges the same day to conclude what ended up being the largest Ponzi scheme in Wall Street history.

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📰 I’m Phil Rosen, co-founder and editor-in-chief of Opening Bell Daily. I’ve published books, lived on three continents, and won awards for my journalism, which has appeared in Business Insider, Fortune, Yahoo Finance, Bloomberg and Inc. Magazine.

I write our flagship newsletter and host our show, Full Signal, to prepare you for each trading day — unpacking markets, economic data and Wall Street with analysis you won’t find anywhere else.

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