Wall Street Soars as Inflation Fears Ease and Rate Cuts Loom in December 2025

• Why Are Markets Celebrating Today?
• The Streaming Wars Heat Up
• Fed Leadership Shakeup Coming?
• Mixed Signals in Labor Markets
• Corporate Spotlight: Winners and Losers
• Commodities and Currencies
• What's Next for Investors?
• Frequently Asked Questions

Wall Street is riding high this Friday, with major indices hitting fresh peaks as investors cheer cooling inflation data and growing expectations of Federal Reserve rate cuts. The S&P 500 climbed 0.36% to 6,881 points, the Dow Jones gained 0.40% to 48,042 points, and the Nasdaq advanced 0.41% to 23,602 points. The market rally comes amid a blockbuster $72 billion Netflix-Warner Bros. Discovery merger announcement and surprisingly positive economic indicators that have erased recent AI valuation concerns. bitcoin holds steady near $91,000 while gold and oil prices see modest gains.

Why Are Markets Celebrating Today?

The September inflation data released today (delayed due to processing issues) showed core PCE rising just 0.2% month-over-month versus 0.3% expected, with the annual rate at 2.8% versus 2.9% consensus. This cooling inflation picture has traders pricing in an 87.2% chance of a quarter-point rate cut at the December 10 FOMC meeting, according to CME FedWatch. The potential reduction WOULD bring the fed funds rate to 3.50-3.75%, with further gradual easing expected through 2026.

The Streaming Wars Heat Up

Netflix confirmed its acquisition of Warner Bros. Discovery in a cash-and-stock deal valued at $27.75 per WBD share ($72 billion equity value, $82.7 billion enterprise value). The merger combines Netflix's streaming dominance with Warner's century-old content library including HBO Max, DC Universe, and classics like Casablanca and Friends. Each WBD shareholder will receive $23.25 cash and $4.501 in Netflix stock per share. The deal is expected to close in 12-18 months after Warner completes its planned separation of Discovery Global in Q3 2026.

Fed Leadership Shakeup Coming?

Former President Donald TRUMP hinted this week that Kevin Hassett, his current National Economic Council director, would likely replace Jerome Powell as Fed Chair. "I know who I'm going to choose," Trump stated, criticizing Powell's reluctance to cut rates faster. Hassett, Trump's top economic advisor, has reportedly been preparing for the role since mid-2024.

Mixed Signals in Labor Markets

While job cuts surged 54% year-over-year to 1.17 million through November (led by telecom, tech, and food sectors), weekly unemployment claims unexpectedly dropped to 191,000 - the lowest in three years. Personal incomes ROSE 0.4% in September matching forecasts, though consumer spending grew slightly slower than expected at 0.3%.

Corporate Spotlight: Winners and Losers

soared after raising full-year guidance, whilebeat Q3 estimates with $2.86 billion revenue.posted its first GAAP-profitable quarter with 29% revenue growth. On the downside,cut profit forecasts blaming government shutdown impacts and fuel costs, andfell despite raising subscription revenue guidance.

Commodities and Currencies

WTI crude gained 0.9% to $60.20/barrel, gold rose 0.8% to $4,244/ounce, while the dollar index dipped 0.1%. Bitcoin traded sideways near $91,000 as crypto markets await clearer regulatory signals from Washington.

What's Next for Investors?

With the Fed's "higher for longer" stance potentially softening, market focus now shifts to November employment data due next week and final 2025 consumer sentiment readings. The Michigan preliminary December consumer sentiment index just printed at 53.3 versus 52 expected, with year-ahead inflation expectations falling to 4.1% from 4.5%.

Frequently Asked Questions

When will the Netflix-Warner Bros deal close?

The $72 billion acquisition is expected to finalize in 12-18 months, pending regulatory approvals and completion of Warner's Discovery Global spinoff in Q3 2026.

How likely is a December Fed rate cut?

Markets currently price an 87.2% probability of a 25-basis-point reduction at the December 10 FOMC meeting, according to CME FedWatch data.

Why did Ulta Beauty stock jump 14%?

Ulta beat Q3 estimates with $2.86 billion revenue (+13% YoY) and raised full-year EPS guidance to $25.20-$25.50, citing strong holiday beauty demand.