OPENING CALL
Stock futures edged up on Tuesday as investors awaited the Federal Reserve's last rate-setting meeting of the year, which starts today.
Market pricing shows a nearly 90% probability of a 25-basis-point rate cut on Wednesday.
"Markets expect a 'hawkish cut' --a rate cut paired with guidance that the Fed may hold off on further easing to be sure inflation isn't heating back up," Peak Trading Research said.
BNY analysts said investors should take guidance from the voting split.
"There are a few other things to watch at this gathering , including how widely supported the anticipated rate move will be across the Committee--will there be dissents as there were at the October FOMC?, " it said.
Investors have grown less confident about rate cuts next year , in part because of cautious comments by Kevin Hassett, the favorite to be the next Fed chair.
"Some traders worry that the central bank may signal a slower pace of easing going forward," Tickmill said. Concerns stem from persistent inflation and limited data due to the recent government shutdown.
Focus Tuesday will center on delayed JOLTS job openings data as the degree of labor demand will likely influence how far and how fast interest rates fall from here.
Earnings due today include AutoZone, Campbell's and GameStop.
Stocks to Watch
Ford is partnering with Renault to make small electric vehicles for the European market . The first of two planned EV models is due to hit dealerships in 2028.
Trump said he would let Nvidia export its H200 chip to China, and the U.S. would receive a 25% cut . Shares in Nvidia, which has fought to maintain access to the Chinese market, gained about 1.5% premarket.
PepsiCo agreed with activist investor Elliott Investment Management to cut costs across the company and lower food prices , The Wall Street Journal reported.
Toll Brothers posted mixed quarterly earnings and gave a cautious outlook on house deliveries. Shares fell roughly 4% offhours.
Watch For:
World Agricultural Supply & Demand Estimates (WASDE); Federal Open Market Committee meeting
Today's Top Headlines/Must Reads:
-An Unusually Divided Fed Is Expected to Deliver a Rate Cut
-Sam Altman's Sprint to Correct OpenAI's Direction and Fend Off Google
-Behind Paramount's Relentless Campaign to Woo Warner Discovery and President Trump
MARKET WRAPS Forex:
The dollar traded steady.
Markets are anticipating that Wednesday's rate cut "will be delivered with a more hawkish communication," Danske Bank said.
ING said the dollar would likely rise if delayed JOLTS job openings figures beat expectations.
"With market pricing of further Fed easing still vulnerable, we suspect the dollar's downside is limited into the Fed meeting."
Bonds:
Treasury yields were mixed.
"The closer we get to Wednesday's FOMC rate decision--and more importantly the Fed narrative and outlook into 2026--the more fragile market sentiment appears to become," First Abu Dhabi Bank said .
UBS continues to expect Treasury yields to move lower despite Monday's rise. With returns coming from a mix of yield and capital appreciation, the bank continues to see value in holding quality fixed income within a portfolio.
Energy:
Oil prices slipped in early trading , extending the previous session's losses as traders focused on talks to end the war in Ukraine, a looming global supply surplus and U.S. interest rates.
Metals:
Gold prices were broadly steady as uncertainty builds around the Fed's interest-rate outlook past December.
"With the Fed meeting now the dominant driver , we expect metals to remain range-bound until [Fed Chair] Powell provides clearer guidance on the pace of easing beyond December," Sucden Financial said.
State Street said gold was likely to consolidate in the range $4,000-$4,500 an ounce in 2026. This year's structural trends are unlikely to reverse and collectively still point to a supportive backdrop for prices, it added.
Copper
Copper gained in early trade after notching a record high on Monday. The prospect of stronger demand in China is supporting the base metal's gains , said ANZ.
Iron
Iron ore prices declined.
The prospect of further fiscal stimulus has failed to boost sentiment in steel and iron ore markets, ANZ said.
TODAY'S TOP HEADLINES
EU Probes Google Over Use of Online Content to Power AI
The European Union opened an antitrust investigation into Alphabet's Google, citing concerns about how it uses uploaded content on platforms such as YouTube to power and train its artificial-intelligence tools.
The European Commission said Tuesday that it is looking into whether Google is distorting competition by imposing unfair terms and conditions on publishers or by giving itself privileged access to their content. The EU's executive arm said such practices could put Google's own AI tools at an advantage over competitors.
Trump Says U.S. Will Allow Nvidia H200 Chip Sales to China, Get 25% Cut
WASHINGTON-President Trump said he would let Nvidia export its H200 chip to China and that the U.S. would receive a 25% cut, his latest bid to make money for the government in an unusual agreement with a private company.
"I have informed President Xi of China that the United States will allow Nvidia to ship its H200 products to approved customers in China and other countries under conditions that allow for strong national security, " Trump said on Truth Social. He added: "25% will be paid to the United States of America."
Ford and Renault Team Up in Europe to Compete Against Low-Price Chinese Cars
Ford is turning to French peer Renault to help reboot its European business, in a fresh sign of the upheaval being caused by Chinese automakers outside the U.S.
"We know we're in a fight for our lives in our industry, and no better example than here in Europe," Ford Chief Executive Officer Jim Farley told journalists in Paris.
BMW Appoints Company Veteran Milan Nedeljkovic as New Chief
BMW named Milan Nedeljkovic as its new boss, choosing a company veteran to lead the automaker from next year.
Nedeljkovic has worked at BMW since 1993 and has been a member of the board of management responsible for production since 2019.
An Unusually Divided Fed Is Expected to Deliver a Rate Cut
When Federal Reserve officials gather Tuesday for their final two-day rate-setting meeting of the year, as much as half the room might not want a cut.
But the final call will rest with Chair Jerome Powell, who appears poised to secure one despite the unusual opposition.
Consumer Loans Are Getting Harder to Tally-and the Risks Harder to Gauge
Having trouble trying to figure out how the U.S. consumer is doing lately? You aren't alone. Now, the increasing migration of consumer lending to less-visible parts of the financial system is only adding to the difficulty.
Private credit is exploding onto the scene in what is known as alternative consumer lending. Analysts at KBW tallied up new private-credit funding deals this year for financial-technology firms in consumer lending and estimated that those deals could support nearly $140 billion in lending globally over the next few years. That is a big surge from under $10 billion in 2024, the analysts estimated.
China's Manufacturing Is Booming Despite Trump's Tariffs
President Trump retook the White House almost a year ago promising a manufacturing boom.
He got one-in China.
Gaza Sits Under 68 Million Tons of Rubble. A Look at the Daunting Task Ahead.
The war in Gaza has reduced much of the enclave to rubble, with most of its buildings either destroyed or damaged. Clearing it to pave the way for rebuilding will be a gargantuan task that is expected to take years and cost over a billion dollars.
Thousands of Israeli airstrikes, along with fighting on the ground and controlled demolitions, have destroyed more than 123,000 buildings in the Gaza Strip and left an additional 75,000 damaged to varying degrees, accounting for 81% of all the structures in the enclave, according to the latest review of satellite images by the United Nations.
Europe Scrambles for Influence in U.S.-Led Peace Talks on War in Ukraine
European powers are pushing to have a bigger say in the U.S.-led peace process to ensure that Ukraine isn't forced to accept a deal that leaves it, and the rest of Europe, vulnerable to future Russian aggression.
The leaders of the U.K., France and Germany met in British Prime Minister Keir Starmer's Downing Street residence with Ukrainian President Volodymyr Zelensky on Monday, their latest effort to influence negotiations as the U.S. pushes for a swift agreement to end the war.
Trump Backs Away From Pledge to Release Boat-Strike Video
WASHINGTON-President Trump backed away from a vow to release video of a controversial Sept. 2 attack on an alleged drug boat in the Caribbean, including a portion showing the killing of two men who survived the initial strike.
The president last week said he would "certainly release" the footage of the entire operation, but that was before the mounting uproar over the operation. Democrats said after viewing the video in closed briefings on Capitol Hill that the follow-up attack on the two survivors may have constituted a war crime. Republicans have defended the strike, but some have also joined in calling for the video to be released.
The Curriculum Flowchart That Has Texas Professors Up in Arms
A controversy is swirling at a Texas university. The trigger? A flowchart.
On Dec. 1, the new chancellor of the Texas Tech University system sent professors a diagram laying out a chain of approval for course material. It accompanied a memo with rules for teaching about race and gender, including a ban on "advocacy/promotion of race or sex-based prejudice."
Write to priscila.barrera@wsj.com
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12-09-25 0609ET
