Here are the 2 big things we’re watching in the stock market in the week ahead
We are in the final period of 2025 and entering the second week of December, when the market is historically strong. Barring a catastrophe, the S&P 500 is expected to post gains for the third consecutive year. The index is up almost 17% year to date. Whether it goes up or down from here depends on what happens this week. The Federal Reserve’s final policy meeting of the year, scheduled for Tuesday and Wednesday, is one of the biggest events we’ll be watching next week. It is also likely to be the most important outcome. The other is earnings for Broadcom and Costco, two portfolio names that reported after the closing bell on Thursday. 1. Fed meeting: There’s little drama on whether the Fed plans to cut interest rates Wednesday afternoon. The market has priced in a quarter-point cut, which would be the third such move this year. What investors want to know is how many central bank policymakers oppose it and what they see for the economy in 2026. The Fed releases a summary of economic projections four times a year, and its December meeting statement is the last this year. While what Fed Chairman Jerome Powell said at the post-meeting press conference will also be scrutinized, will it be as important as it normally is? We know his tenure as Fed chairman ends in May, and President Donald Trump has made no secret that he thinks Powell should cut interest rates more aggressively. At last week’s cabinet meeting, the president said he planned to name Powell’s successor early next year, after telling reporters a few days earlier that he knew who he would choose. National Economic Council Director Kevin Hassett is seen as the favorite. Whoever replaces Powell will find themselves in a dilemma trying to find the sweet spot on interest rates, as both sides of the Fed’s dual mandate are at odds with each other. Inflation remains stubbornly above the central bank’s long-term target of 2% and the job market is weakening. 2. Earnings: According to FactSet, 99% of S&P 500 companies reported better-than-expected earnings, with 83% reporting better-than-expected earnings and 76% reporting better-than-expected revenue. Technology led the way, with 94% of companies beating earnings expectations and 89% outperforming revenue. According to expectations, the sector whose earnings increased the most was the industrial sector. The last few remaining will report quarterly results this week. Starting with Broadcom, we’re certainly interested in hearing the dynamics surrounding custom AI chip demand following the launch of Google’s Gemini 3, which has been lauded as the leading big language model. Gemini 3 was trained and run exclusively on Google’s seventh-generation tensor processing units (TPUs), developed in conjunction with Broadcom. Given the need for interconnect solutions that comes with the shift to a rack-scale architecture in data centers, Broadcom’s networking sales will likely attract a lot of attention outside of custom chips, as that’s where the bulk of AI demand is occurring. Management’s forward guidance to 2026 will also be an important item to keep an eye on. As of Friday, the Street expects Broadcom’s fiscal 2025 fourth-quarter earnings per share (EPS) to rise 31% year over year to $1.86, with a 17.5% increase in revenue to $17.49 billion, according to LSEG. As for Costco, our focus will be on management’s comments regarding tariffs for which the company is suing the Trump administration over foot traffic and what customers are seeing in terms of basket size and mix. Costco publishes sales data monthly; So while we value the additional information we get when it comes to margin dynamics as well as sales mix, the headline revenue figure tends to be less of a focus than we see at other companies. Outside of the reported quarter, updates on Black Friday and Cyber Week sales will help sharpen our understanding of consumer health and thus the 2026 economic outlook. As of Friday, the Street expects Costco’s fiscal 2026 first-quarter earnings per share to rise 5.8% year over year to $4.28, with revenue up 8% to $67.17 billion, according to LSEG. (Jim Cramer’s Charitable Trust is long AVGO, COST. See here for a full list of stocks.) When you subscribe to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trading alert before buying or selling a stock in his charitable foundation’s portfolio. If Jim talked about a stock on CNBC TV, he waits 72 hours after issuing the trading alert before executing the trade. THE ABOVE INVESTMENT CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY, TOGETHER WITH THE DISCLAIMERS. NO CIVIL OBLIGATIONS OR DUTIES EXIST OR SHALL BE RESULTING FROM YOUR RECEIVING ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTMENT CLUB. NO SPECIFIC RESULT OR PROFIT CAN BE GUARANTEED.
