By Anna Szymanski
LONDON, Dec 11 – By Anna Szymanski, Editor in Charge, Reuters Open Interest
What matters in U.S. and global markets today
The Federal Reserve gave markets an early holiday gift yesterday, as the widely expected 25 basis point interest rate cut was accompanied by a less-hawkish-than-anticipated tone from Chair Jay Powell, positive soundings about U.S. productivity, and the announcement of a $40 billion per month Treasury bill buying binge.
But Oracle could prove to be the Grinch that stole Wall Street futures this morning, as the cloud-computing giant’s earnings miss and revelation of more massive spending plans touched a nerve with investors worried about AI capex excess.
I’ll get into all the market news below.
But first check out Mike Dolan’s latest column on why the Fed’s latest policy move isn’t the interest rate story you should be focusing on.
And listen to the latest episode of the new Morning Bid daily podcast. Subscribe to hear Mike and other Reuters journalists discuss the biggest news in markets and finance seven days a week.
Today’s Market Minute
* After three consecutive interest rate cuts, investors now confront an uncertain U.S. monetary policy outlook for the year ahead, clouded by persistent inflation, data gaps, and an impending leadership change at the Federal Reserve.
* The U.S. has seized a sanctioned oil tanker off the coast of Venezuela, President Donald Trump said on Wednesday, as tensions escalate between Washington and Caracas.
* Oracle forecast sales and profit that missed analyst estimates on Wednesday, while saying that spending would rise by $15 billion compared with earlier estimates.
* Oil production in the Permian basin is poised to peak in December, yet drilling innovations mean output in America’s most prolific oil patch will hold steady for years to come, argues ROI Energy Columnist Ron Bousso.
* India’s crude oil imports from Russia are on track to climb to a six-month high in December as the world’s third-biggest buyer defies U.S. sanctions on Moscow’s oil producers, writes ROI Asia Commodities Columnist Clyde Russell.
Oracle crashes Powell’s party
While the Fed trimmed interest rates on Wednesday, Chair Powell also indicated that borrowing costs are unlikely to drop further in the near term as policymakers await more official data on the health of a seemingly creaky U.S. job market and the trajectory of inflation that still “remains somewhat elevated.”
The decision drew three dissents that, unusually, were calling for actions in opposite directions. Chicago Fed President Austan Goolsbee and Kansas City Fed President Jeffrey Schmid argued the policy rate should be left unchanged, while Fed Governor – and associate of President Donald Trump – Stephen Miran advocated for a 50 bps cut.
The Fed also noted that it projects only one more 25 bps rate cut next year followed by another in 2027 – unchanged from its previous forecast – which would leave the fed funds rate in the range of 3.50%-3.75%. This contrasts with market expectations for two quarter point cuts in 2026.
Nevertheless, Wall Street initially welcomed the Fed announcement, including news of a reserve management program that ROI market columnist Jamie McGeever flagged as a possibility earlier this week. The central bank said it will start buying short-dated government bills – starting at $40 billion per month – to help manage market liquidity levels.
But then came news that Oracle, a bellwether firm in the AI boom, missed analyst estimates for third-quarter sales and profit, while also announcing that spending in fiscal year 2026 would be $15 billion higher than the $35 billion forecast in September. These results feed into investors’ worries that massive capital expenditures related to AI are not quickly turning into profits. Oracle’s share price fell more than 11% after hours.
The U.S. tech giant’s stumble sent Asian stocks sliding on Thursday. Japan’s Nikkei closed 0.9% lower, with SoftBank Group plummeting 7.69%. CEO Masayoshi Son’s firm earlier this year joined Oracle and OpenAI in announcing plans to develop AI data centers in the U.S to build out their enormous Stargate project.
In other news, the U.S. seized a sanctioned oil tanker off the coast of Venezuela yesterday, the first known action against a Venezuela-related tanker since President Trump ordered a significant military buildup in the region. While oil futures rose modestly on the news, they retreated fairly quickly, as market fundamentals, not headlines, continue to drive crude prices.
Chart of the day
The most recent official data on U.S. inflation shows that the Federal Reserve’s preferred gauge of price rises nudged up to 2.8% in September from 2.7% the prior month, still above the central bank’s 2% target. Inflation has risen steadily from 2.3% in April, partly because of the pass-through of President Donald Trump’s tariffs, though Fed Chair Jay Powell indicated on Wednesday that tariffs should represent a one-off hit to inflation.
Today’s events to watch
U.S. initial jobless claims (8:30 EST)
U.S. September trade deficit (8:30 AM EST)
Earnings at Costco, Broadcom and Lululemon
Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.
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(By Anna Szymanski)
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