How stocks usually react to December Fed days — and why Powell’s final meeting of 2025 could be different

Core Viewpoint - Investors are preparing for the Federal Reserve's final interest-rate decision of 2025, with historical trends indicating a modest gain for the S&P 500 on Fed days in December [1][2]. Group 1: Historical Performance - Since 2000, the S&P 500 has averaged a gain of approximately 0.2% on December Fed days, with a median gain of 0.1% [2]. - Last December was an exception, as the S&P 500 experienced its largest decline on a Fed day since 2000, following the release of economic projections that suggested a slower pace of rate cuts [3]. Group 2: Market Reactions - Fed Chair Jerome Powell has historically caused market volatility on Fed days, often leading to significant sell-offs in the final trading hour [4]. - Recently, however, the S&P 500 has shown less volatility on Fed decision days, with an average one-day change of only 0.14% over the last five Fed days [7]. Group 3: Current Expectations - Investors anticipate a 25 basis point rate cut from the Federal Open Market Committee, with a focus on guidance for the rate path in 2026 and any signs of division among FOMC voting members [6]. - The consensus suggests that today's rate cut may be characterized as a "hawkish cut," indicating a pause on further cuts for the time being [8].