The beginning of the week saw fairly muted trading, as investors awaited Wednesday's highly anticipated interest rate decision. The central bank cut rates by 25 basis points for the third -- and final -- time this year, bringing the target range to 3.50% - 3.75%. According to the central bank's dot plot, the Fed projects one rate cut in 2026, though the CME Fedwatch tool is pricing in a 68% chance of two rate cuts next year.
Though the broader market enjoyed the Fed-induced lift, AI valuation concerns brought on by Oracle's (ORCL) sharp post-earnings drop quickly put a damper on the tech sector. However, the Dow Jones Industrial Average (DJI), S&P 500 Index (SPX), and small-cap Russell 2000 Index (RUT) all notched record closes on Thursday, as investors rotated back into cyclical stocks. At this point on Friday, however, the AI rout is bleeding into the broader market, with all three major benchmarks deep in the red midday. At this point, the Dow is still headed for a weekly win, while the S&P 500 and Nasdaq eye weekly losses.
Major Merger & Acquisition News
Netflix (NFLX) drew scrutiny this week, after the company announced a $72 billion deal to buy Warner Bros Discovery (WBD) -- including its film studios, HBO, and HBO Max -- pending regulatory approval. In response, Paramount Skydance (PSKY) submitted a hostile bid valued at $108.4 billion, or $30 per share, $18 billion more in cash than its competitor.
Meanwhile, IBM (IBM) is acquiring Confluent (CFLT) for $11 billion, the U.S. approved Nvidia's (NVDA) chip sales to China, AeroVironment (AVAV) secured an $874.26 million contract with the U.S. army, and Fermi's (FRMI) AI data center deal fell through. Plus, both Eli Lilly (LLY) and Corbus Pharmaceuticals (CRBP) posted strong trial data for their obesity drugs.
Earnings, Weed News Trickle In
Homebuilding stock Toll Brothers (TOL) marked its fifth-straight post-earnings loss amid a choppy home sales environment. Broadcom (AVGO) pulled back from its record highs after earnings, succumbing to broader AI concerns amid margin pressures. Elsewhere, Planet Labs (PL) stock hit an all-time high after its strong report, while Costco Wholesale (COST) brushed off a quarterly win and price-target hikes.
Weed stocks, particularly Tilray (TLRY), are surging Friday after the Washington Post reported that U.S. President Donald Trump plans to reclassify marijuana and dramatically loosen restrictions. According to CNBC, the executive order could be signed as soon as Monday of next week.
The Year's Last Full Trading Week
The last full trading week of 2025 will bring plenty of economic data as well, along with earnings reports from Nike (NKE), Micron Technology (MU), and several more. As we round the corner, Schaeffer's Senior Quantitative Analyst Rocky White put together a list of the best and worst stocks to own during the second half of December, which also tends to be a historically bullish time for the market. Zooming out, Senior V.P. of Research Todd Salamone noted several S&P 500 levels to watch as bulls remain in control.
