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Stocks were choppy Tuesday, with market participants in wait-and-see mode ahead of tomorrow’s policy announcement from the Federal Reserve. With the central bank widely expected to cut interest rates again, rate-sensitive small caps outperformed and the Russell 2000 hit a new intraday high.
The small-cap benchmark fell short of a new record close, though, gaining 0.3% to 2,529. The tech-heavy Nasdaq Composite (+0.1% at 23,576) also finished in positive territory, while the broader S&P 500 (-0.09% at 6,840) and the blue-chip Dow Jones Industrial Average (-0.4% at 47,560) ended in the red.
The Fed will wrap up its final meeting of 2025 tomorrow afternoon. According to CME FedWatch, futures traders are currently pricing in an 87% chance the central bank will lower the federal funds rate by a quarter-percentage point to a range of 3.5% to 3.75% – the lowest it’s been since September 2022.
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But just “beneath this near certainty lies an unusual public split within the Federal Open Market Committee,” says Larry Adam, chief investment officer at Raymond James. “Recent dissents highlight the challenge of balancing a cooling job market against stubborn inflation – casting fresh uncertainty over the policy path for 2026.”
And the end of Jerome Powell’s term as Fed chair in May adds intrigue to the rate-cut debate. National Economic Council director Kevin Hassett, who is the frontrunner to replace Powell, said during a Wall Street Journal CEO Council event on Tuesday that “there’s plenty of room” to cut rates moving forward, “if the data suggests we could do it.”
For now, Wall Street will have to rely on the FOMC’s Summary of Economic Projections, or “dot plot”, to see where committee members expect the federal funds rate to be at the end of 2026.
In September, the dot plot revealed median expectations for just one quarter-point rate cut in 2026, following three in 2025. “We don’t anticipate major changes to that median view, but the growing gap between market pricing and the Fed’s expected rate path is a risk worth watching,” says Adam.
Job openings were little changed in October
The Federal Reserve received its last labor market update ahead of tomorrow’s policy decision with this morning’s release of the Job Openings and Labor Turnover Survey (JOLTS).
According to the Bureau of Labor Statistics, there were 7.67 million job openings in October, a tick higher than the 7.658 million job openings in September.
Total separations, which include quits, layoffs and discharges, slipped to 5.05 million from 5.264 million, as did hires (to 5.149 million from 5.367 million).
“The labor market is holding on, though it remains fairly unfriendly to job seekers,” says Elizabeth Renter, senior economist at NerdWallet. “When employers aren’t hiring, it makes it difficult for those without work, but also those who could otherwise move on from their current jobs to better opportunities.”
The stagnation in both hiring and quits isn’t great for the economy, she says, “but it’s not bad enough to cause alarm. A more dramatic pullback in hiring could push the unemployment rate up, as could significant layoffs, but we’re not seeing either of those in the data, yet.”
Nvidia slips after Trump OKs chip sales to China
In single-stock news, Nvidia (NVDA) erased a pre-market lead to end the day down 0.3% even after President Donald Trump on Monday said the tech giant can sell its H200 artificial intelligence chips to China.
The chips would be available to “approved customers,” wrote Trump in a Truth Social post, and the U.S. will receive 25% of the sales. “President Xi responded positively” to the news, Trump added.
But the H200 chips are two generations behind Nvidia’s B300 chips, says William Blair analyst Sebastien Naji, and “it remains unclear whether there will be actual orders for these older GPUs.”
Naji points out that the reversal of the H20 chips in August did not create any new sales. Additionally, China has increased its focus on domestically produced chips from companies such as Huawei and Cambricon.
Still, the analyst does expect sales of the H200 chips, which are more powerful than H20s, to materialize and drive upside to fiscal 2027 revenue estimates.
JPMorgan slides on $105 billion expense forecast
NVDA was one of 19 Dow Jones stocks that closed in the red on Tuesday, but the worst of the bunch was JPMorgan Chase (JPM), which slid 4.7% after increasing its 2026 expense forecast.
The country’s biggest bank by assets under management said it expects to spend $105 billion next year, up from an estimated $95.9 billion in spending this year and analysts’ forecast for $101 billion.
Marianne Lake, CEO of JPM’s Consumer & Community Banking segment, said the spending will cover compensation and product marketing costs, as well as strategic investments such as AI.
