Markets Edge Lower as Fed Cut Odds Reshape Investor Bets

Global equities are easing on December 15 as investors step back ahead of a packed calendar of central bank meetings and important economic releases. Trading is choppy and cautious, with market participants reluctant to take large positions before the Federal Reserve announces its decision and Chair Jerome Powell delivers remarks that could signal the path for further policy moves.

Market pricing leaves little doubt that investors expect a near term policy shift from the Fed. The CME Group FedWatch Tool shows an 89.6 percent probability that the Fed will cut its policy rate by 25 basis points at the December meeting, and market pricing assigns a 70.4 percent chance that rates will remain unchanged in January. Federal funds futures imply roughly an 87 percent probability of a December cut, reflecting a rapid recalibration of expectations since mid November.

That recalibration is reshaping sector performance. Technology names and other cyclicals are under particular pressure, leaving major indexes only a few percentage points shy of fresh records even as leadership within the market appears to be shifting. Bank of America warned that the recent tech underperformance, driven in part by concerns about an AI related valuation bubble, could presage a change of market leadership heading into 2026. A set of large cap stocks commonly used by market watchers to gauge recent flows and sentiment includes SBUX, MRNA, AAPL, TSLA, AMZN, META, AMD, NVDA, PEP, COST, ADBE, GOOG, AMGN, HON, INTC, INTU, NFLX, and ADP.

Fixed income is sending mixed signals. Benchmark U.S. Treasury yields are rising amid the move in equities, reflecting both repositioning for expected Fed easing and continued scrutiny of inflation data. Traders are parsing the latest inflation metrics and employment readings for signs of persistence or cooling, because the Fed is balancing the twin goals of price stability and labor market strength as it considers easing policy.

The immediate market question is not only whether the Fed will deliver a quarter point cut, but what language will accompany that cut and how quickly additional reductions might follow. Investors are watching the Fed statement and the post meeting remarks for guidance on the committee’s priorities and the sequence of possible cuts in 2026. Any signal that the Fed intends a gradual pace would likely sustain volatility in interest rate sensitive sectors, while clearer commitments to a multi cut path could prompt a broader rally, particularly among beaten down growth names.

Beyond the Fed, central bank decisions in other economies and upcoming inflation releases will shape the near term outlook. For now markets are trading on probability curves and policy cues more than on corporate fundamentals, leaving leadership fragile and volatility poised to rise if central bank language departs from current market expectations.