Outside the AI sector, markets were choppy all week. Stocks drifted, liquidity was thin, and investors leaned heavily on the hope of a Fed rate cut in December. The only real support came when Fed officials hinted that easing might be justified.
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Bonds captured the mood better than stocks. Yields fell across the board, especially in the 2-year, as traders doubled down on the idea of a near-term pivot. But when both stocks and yields fall at the same time, it usually reflects caution, not confidence.
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The bigger picture hasn’t changed: borrowing costs remain high, credit stress is appearing in pockets of the economy, and consumers are slowing down. Those forces kept volatility high even as Friday's rebound grabbed attention.

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A Fed Meeting That’s Getting Harder to Read

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The upcoming Fed meeting has become more unpredictable. Newly released minutes showed many officials favored holding rates steady in December, while several supported a cut — a split that leaves the committee without a clear consensus. The latest jobs report didn’t settle things either: hiring improved modestly, but unemployment edged higher and wage growth softened, leaving the overall picture mixed.
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Complicating matters is the government shutdown delay. The October and November employment reports won’t arrive until after the December meeting, meaning the Fed will have to make its decision without the usual set of data. That uncertainty is a key reason markets have been struggling to find direction.
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The broader environment is also adding to the challenge. Recent market swings have interrupted months of steady optimism, and the drip of delayed economic releases has made it harder for investors to gauge momentum in real time. Rate expectations are still leaning toward early cuts, but they rest on assumptions that could shift quickly if incoming data surprises.
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Looking further ahead, early 2026 may look different. Fiscal spending is expected to pick up, companies continue to invest heavily in AI-related infrastructure, and financial conditions remain easier than they were earlier in the year. Those forces could support growth next year — but for now, the path into the December meeting remains unusually murky.

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