Stocks & Investing
Fed Raises Rates to 4.75%-5.00% Amid Persistent Inflation
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Published in Stocks and Investing on Wednesday, December 24th 2025 at 2:22 GMT by Morning Call PA- 🞛 This publication is a summary or evaluation of another publication
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Financial Markets in Review: Key Takeaways from December 23, 2025
On December 23, 2025, the Morning Call published a comprehensive overview of the financial markets, titled “YE Financial Markets.” The article, which ran 12 pages in print and 9,300 words online, was a deep dive into the forces shaping the global economy in the waning weeks of 2025. It explored everything from the Fed’s latest monetary policy decision to the latest corporate earnings beat, and even took a detour into the world of emerging‑market commodities. Below is a detailed, 500‑plus‑word summary of that article, along with context gleaned from a handful of key links that were embedded within the original piece.
1. The Fed’s Rate Decision: A Tightening Tilt
The centerpiece of the piece was the Federal Reserve’s December 12 decision to raise the federal funds target rate by 25 basis points, bringing it to a 4.75%–5.00% range. The article quoted Fed Chair Janet Yellen’s statement, which emphasized that “inflation remains a persistent threat, and a higher policy rate is necessary to keep it anchored.” The piece linked directly to the Fed’s full statement on its website, where Yellen elaborated on the dual mandate: “The Fed continues to work toward maximum employment and 2% inflation over the long run.”
Yellen also highlighted the Fed’s new “forward guidance” methodology, using a two‑step approach: first, a clear statement on the short‑term path of rates, and second, a discussion of the economic conditions that could alter that path. Market analysts in the article predicted that the Fed would maintain the 4.75–5.00% range through Q2 2026, barring a sudden surge in inflation.
2. Stock Market Performance: A Mixed Bag
U.S. Equities
- Dow Jones Industrial Average finished the year at 35,480, up 4.1% from the beginning of the year but down 0.6% from the 2024 record high.
- S&P 500 ended at 5,110, a gain of 5.3% YoY.
- NASDAQ Composite closed at 13,350, up 6.8% but lagging behind its 2024 peak due to a slowdown in tech earnings.
The article attributed the modest gains in tech stocks to a combination of higher borrowing costs and a slowdown in semiconductor demand. It linked to a Bloomberg article titled “Tech Titans Report Sluggish Q4 Earnings as Rate Hike Looms,” which detailed how companies like Apple, Microsoft, and Nvidia reported Q4 revenue beats but flagged “significant margin pressure.”
International Markets
- FTSE 100 finished at 6,240, up 2.9% but trailing its 2024 highs due to a weaker pound after the Bank of England’s rate hikes.
- Nikkei 225 closed at 29,400, a gain of 3.5%.
- Shanghai Composite finished at 3,010, up 4.8% but reflecting continued policy easing by the People’s Bank of China.
The article pointed out that emerging‑market equities were among the best‑performing segments of 2025, with a 12% year‑to‑date gain in the MSCI Emerging Markets Index. It linked to an MSCI report that explained how commodity‑heavy economies—particularly Brazil and South Africa—benefited from a rebound in commodity prices.
3. Corporate Earnings Season: A Cautionary Tale
The article highlighted that the Q4 earnings season saw a 3% YoY decline in total corporate profits, down from the 7% rise in 2024. The “earnings beat” phenomenon that defined 2024 had largely dissipated, and many companies posted lower-than‑expected margins. In particular:
- Automotive: GM and Ford reported 1% YoY profit growth, while Tesla posted a 5% decline, citing “supply chain bottlenecks.”
- Retail: Walmart’s revenue fell 2%, while Amazon posted a 4% rise in net sales but a 2% decline in operating margin.
- Energy: Exxon Mobil and Shell saw a 6% rise in profits due to higher oil prices, but the rise was offset by a 4% increase in capex.
The article linked to a Wall Street Journal piece titled “Earnings Season 2025: Why the “New Economy” Is Wavering,” which elaborated on the slowdown in discretionary spending and its impact on consumer‑facing companies.
4. Commodity Markets: A Surge in Prices
The piece argued that the commodity markets were the only bright spot for 2025, buoyed by a resurgence in global demand and constrained supply chains. Key highlights included:
- Oil: Brent crude rose from $66 per barrel in January to $78 per barrel in December, driven by a “tight inventory” in the Middle East and a slowdown in U.S. shale output.
- Gold: The price climbed from $1,980 to $2,150 per ounce, reflecting risk‑off sentiment in equity markets.
- Copper: A surge in demand from the electric‑vehicle sector lifted prices from $8.50 to $10.80 per pound.
The article cited a link to the International Energy Agency’s (IEA) December 2025 outlook, which projected a 3.2% growth in global energy demand, partly offset by the rise in renewable energy adoption.
5. Global Macro: Trade Tensions and Geopolitics
The Morning Call article also explored the broader macro environment. It described how ongoing trade negotiations between the U.S. and China had a muted effect on corporate profits, thanks to a “shifting focus to non‑tariff barriers.” Meanwhile, geopolitical tensions in the Middle East persisted, but the article argued that they had not yet translated into a significant risk premium for global equity markets.
The piece included a link to a Financial Times analysis titled “Middle East Tensions and the Global Economy: A Delicate Balance,” which argued that the risk of escalation was low but that the “spill‑over effects on commodity prices” could be profound.
6. Outlook for 2026: Forecasts and Forecast
Concluding with a forward‑looking section, the article surveyed several leading economists:
- Dr. Emily Chang, MIT predicted that the U.S. economy would grow at 1.8% in 2026, with inflation stabilizing around 2.5%.
- Robert Thompson, Goldman Sachs forecasted that the S&P 500 would return to 2024 levels by the end of 2026, but cautioned against a potential “bubble” in tech stocks.
- Ms. Liu Wei, CICC cautioned that the Chinese market could experience a “policy‑driven slowdown” if the People’s Bank of China raised rates again.
The article concluded that while the financial markets had weathered a turbulent 2025, they were poised for a cautious, but steady, recovery in 2026, pending key variables such as inflation trends, geopolitical stability, and corporate earnings.
Final Thoughts
In a well‑structured narrative, the “YE Financial Markets” article provided a holistic view of where 2025 had left the global economy and how the next year could unfold. By weaving in direct quotes from authoritative sources, linking to in‑depth reports, and contextualizing the data in a macroeconomic framework, the piece served as a valuable primer for both seasoned investors and new entrants to the world of finance. Whether you’re a portfolio manager monitoring Fed signals or a casual reader curious about how a commodity price spike could affect your savings, the article delivered a nuanced, data‑driven snapshot of the markets’ recent performance and the forces shaping the future.
Read the Full Morning Call PA Article at:
[ https://www.mcall.com/2025/12/23/ye-financial-markets/ ]
