As the final weeks of 2025 approach, the S&P 500 is poised to secure its third consecutive year of gains, having risen nearly 17% year-to-date. This promising trajectory could continue or take a downturn, depending on key events unfolding this week. Central to market observers is the Federal Reserve’s last policy meeting scheduled for Tuesday and Wednesday, which holds significant implications for economic forecasting.
Market expectations indicate a quarter-point reduction in interest rates, marking the Fed’s third such cut of the year. Investors are particularly interested in discerning how many policymakers might dissent from this decision and the central bank’s outlook for the economy moving into 2026. The December meeting is notable as it includes the final summary of economic projections for the year. Attention will also be focused on remarks from Fed Chairman Jerome Powell during the post-meeting press conference, especially given the uncertainty surrounding his impending departure from the Fed in May. President Trump has indicated his desire for more aggressive rate cuts and hinted at announcing Powell’s successor early next year, with National Economic Council Director Kevin Hassett among the frontrunners.
In tandem with the Fed’s deliberations, earnings reports from companies such as Broadcom and Costco are anticipated on Thursday after the market closes. Overall earnings from the S&P 500 have been positive, with 83% of companies exceeding earnings expectations and 76% surpassing revenue estimates, according to FactSet. The technology sector has particularly outperformed, with 94% of tech firms reporting better-than-expected earnings.
This week’s focus will include Broadcom’s performance amid rising demand for custom AI chips, notably after the release of Google’s new large language model, Gemini 3. This model has generated buzz for its development using Google’s latest tensor processing units, which were collaboratively designed with Broadcom. Analysts are eager to hear updates on networking sales as well, given the increasing necessity for interconnect solutions in modern data centers driven by artificial intelligence advancements. Expectations for Broadcom’s earnings in its fiscal 2025 fourth quarter are optimistic, with forecasts predicting a 31% year-over-year EPS increase to $1.86 and a projected revenue rise of 17.5% to $17.49 billion.
On the other side, Costco’s reported performance will also be closely analyzed, particularly for insights regarding tariffs and consumer behavior. With the company currently engaged in litigation against the Trump administration regarding tariffs, management’s discussion around this issue will be scrutinized, alongside data about foot traffic, customer basket sizes, and the recent sales figures from Black Friday and Cyber Week. Analysts forecast a 5.8% year-over-year growth in Costco’s fiscal 2026 first-quarter EPS to $4.28, accompanied by an 8% increase in revenue to $67.17 billion.
These earnings reports, combined with the Fed’s decisions, will play a crucial role in shaping market dynamics as we move toward the year’s end, influencing both investor sentiment and broader economic prospects for the coming year.
