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POST FED TRADING SENDS US EQUITIES TO RECORD LEVELS

ADMIN || 12th December 2025

The Federal Reserve’s dovish interest-rate cut was enough to boost cyclical stocks, the area’s most reliant on economic growth and send the S&P 500 to a fresh record. But the post-FOMC trade highlights risks lurking in certain cohorts of the market.

You can see that most clearly in the Dow Jones Industrial Average constituents, where financial services and healthcare stocks led gainers. Manufacturing companies like Boeing, Caterpillar and Honeywell also rose.

There was nonetheless skepticism about artificial intelligence stocks and crypto. Because these areas lost ground on Thursday, we canthink of it as investors’ way of confirming that the Fed has removed enough left tail economic risk to allow cyclicals to outperform but not to overshadow skepticism about assets where there have been big gains and disappointments like Oracle results can quickly cast a pall.

In Treasuries, it’s remarkable that the Fed has basically nothing to show right across the yield curve for its 15-month, 175-bp cutting efforts. Not only are 10-year yields higher than when the easing cycle began, two-year yields are down by a single-digit number of basis points.

Traders are still pricing in two, 25-bp cuts through the end of 2026, according to fed funds futures. But the stickiness of yields alongside the rise in gold and silver as well as the Bloomberg commodity index and cyclicals on Thursday points to inflation concerns which threaten the Goldilocks narrative underpinning US assets.

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