On Friday, December 5, 2025, Wall Street is trading around a single question: Did the long‑delayed September PCE inflation report do anything to derail the Federal Reserve’s December rate‑cut narrative?
So far, the answer looks like “not really.”
U.S. stock‑index futures are modestly higher, global shares are on track for a second straight week of gains, and fresh inflation data show price pressures still above the Fed’s 2% target but broadly in line with what investors were expecting. [1]
Key Takeaways
- Futures up, PCE in focus: Before the opening bell, Dow futures were up about 0.1%, S&P 500 futures 0.2%, and Nasdaq 100 futures roughly 0.35% as traders braced for the PCE report. [2]
- Headline PCE slightly hotter, core “sticky”: September headline PCE inflation rose 2.8% year‑on‑year and 0.3% month‑on‑month, while core PCE climbed 2.9% year‑on‑year and 0.2% month‑on‑month, all essentially in line with forecasts. [3]
- Rate‑cut odds remain high: Futures markets still price roughly an 85–90% chance that the Fed will cut rates by a quarter‑point at next week’s meeting, despite a vocal hawkish minority on the FOMC. [4]
- Stock stories to watch: Netflix’s proposed $72 billion acquisition of Warner Bros. Discovery’s studios and streaming assets is lifting WBD shares, while Hewlett Packard Enterprise and nuclear tech firm Oklo are under pressure after disappointing news. [5]
Wall Street Futures Rise Ahead of the Delayed PCE Report
Going into Friday’s session, U.S. equity futures were modestly higher as investors waited for the first major economic data release since a 43‑day U.S. government shutdown temporarily froze official statistics. [6]
Shortly before the open:
- Dow E‑mini futures were up about 0.1% (around 46 points)
- S&P 500 E‑mini futures gained roughly 0.2% (about 13–14 points)
- Nasdaq 100 futures outperformed, up about 0.35–0.36% (around 90 points). [7]
Those moves come on the heels of a choppy Thursday session in which the Dow, S&P 500, and Nasdaq finished little changed, but the small‑cap Russell 2000 surged 1.2% as traders rotated into domestically oriented, rate‑sensitive names that tend to benefit from lower borrowing costs. [8]
Importantly, the S&P 500 is now within about 1% of its record high, a remarkable turnaround given the deep selloff earlier this year during the spring 2025 tariff‑driven market crash. [9]
September PCE Inflation: Sticky, but Not a Shock
The main event of the day is the September Personal Consumption Expenditures (PCE) price index, the Fed’s preferred inflation gauge. The report was originally scheduled for release in late October but was pushed back to December 5 because of the shutdown‑induced data backlog at federal statistical agencies. [10]
According to real‑time data providers, the numbers landed as follows:
- Headline PCE Price Index (YoY, September):
- 2.8%, up from 2.7% in August and slightly above the 2.7% consensus. [11]
- Headline PCE (MoM):
- 0.3%, matching expectations and unchanged from August. [12]
- Core PCE (ex‑food & energy, YoY):
- 2.9%, exactly in line with forecasts and unchanged from August. [13]
- Core PCE (MoM):
- 0.2%, also matching expectations and the prior month. [14]
In plain English:
- Headline inflation ticked up a touch, reflecting still‑firm price growth across the broader basket of consumer goods and services.
- Core inflation remained flat at 2.9%, underscoring that underlying price pressures have eased dramatically from their 2022–23 peaks but are still above the Fed’s 2% target. [15]
For markets, the key point is that nothing in the report screams “re‑acceleration.” The data point to “sticky but stable” inflation: a mild upside surprise on the headline measure, but core inflation exactly where consensus expected.
That combination explains why many economists framed today’s PCE release as a “gut check” for the soft‑landing narrative rather than a decisive turning point. [16]
Fed Rate‑Cut Odds: December Still Looks Live
Ahead of the data, the CME FedWatch tool showed markets pricing roughly an 87% chance that the Fed will cut its benchmark rate at next week’s policy meeting. Traders also expect another quarter‑point cut by mid‑2026, extending an easing cycle that began earlier this year. [17]
Today’s PCE numbers – broadly in line with expectations – are unlikely to dramatically shift those probabilities on their own. As one strategist quoted by Reuters put it, even a slightly hotter print would probably “nudge the odds at the margin” rather than fully pricing out a December move. [18]
Still, this is shaping up to be one of the most contentious Fed meetings in years:
- Reuters notes that as many as five of the 12 voting FOMC members have publicly argued against further cuts, even as markets are almost fully priced for one. [19]
- The debate reflects a tension between “inflation hawks”, worried that tariffs and fiscal stimulus could keep prices elevated, and “doves”, who see cooling growth and normalizing inflation as justification for easier policy. [20]
Adding intrigue, a MarketWatch live blog highlighted that Morgan Stanley’s economists have flipped their call back to a December cut after previously shifting it to January on the back of a hawkish October speech from Chair Jerome Powell. [21]
In other words, markets and big Wall Street forecasters are largely aligned on “cut now, go slow later”, even if some Fed officials remain reluctant.
Global Markets: Equities Firm, Dollar Softer, Bonds and Yen in Focus
The PCE report is not just a U.S. story. It’s the anchor for global risk appetite going into year‑end.
According to Reuters’ global markets roundup: [22]
- European equities are firmer, with the STOXX 600 up about 0.3% in early afternoon trade and roughly 0.7% higher on the week, helped by a surge in mining shares as copper prices hit a record high around $11,700 per metric ton.
- U.S. equity futures are up about 0.2–0.3%, pointing to a modest rally on Wall Street if the PCE data continue to cooperate with the rate‑cut narrative.
- Government bonds are steady after a volatile week.
- U.S. 2‑year Treasury yields hover near 3.54%,
- 10‑year yields around 4.11%, little changed after Thursday’s rise. [23]
- Japan is the bond market wild card:
- 10‑year Japanese government bond (JGB) yields have climbed to their highest levels since 2007,
- 30‑year JGB yields hit record highs after the Bank of Japan signaled it may raise rates to around 0.75%, the highest since the mid‑1990s. [24]
That BOJ shift has pushed the yen stronger against the dollar, complicating popular yen “carry trades” where investors borrow cheaply in yen to buy higher‑yielding U.S. assets. A more hawkish BOJ paired with a more dovish Fed narrows the U.S.–Japan rate gap, challenging a strategy that has quietly supported risk assets for years. [25]
Meanwhile, the U.S. dollar index is modestly lower and on track for a weekly decline, reflecting growing conviction that the Fed will cut again next week. [26]
In commodities:
- Gold is up about 0.3% around $4,220 an ounce,
- Silver is gaining roughly 1.3%,
- Brent crude trades near $63 a barrel, slightly lower on the week,
- Copper’s record high is reinforcing the narrative that global growth and the green‑energy buildout are still supporting demand for industrial metals. [27]
Big Stock Stories: Netflix–Warner Bros. Megadeal, HPE and Oklo Slide
Beyond macro, individual names are adding color to Friday’s trade:
- Warner Bros. Discovery (WBD)
- Shares are up roughly 3% in pre‑market trading after Netflix agreed to buy WBD’s film and television studios and streaming assets in a deal reportedly worth about $72 billion. [28]
- The deal would radically reshape the streaming landscape, consolidating content libraries and potentially giving Netflix even more pricing power – but also raising regulatory and integration questions.
- Netflix (NFLX)
- Netflix shares are slightly lower pre‑market, as investors weigh debt, dilution, and execution risk against the strategic benefits of the acquisition. [29]
- Hewlett Packard Enterprise (HPE)
- HPE stock is down nearly 10% after the company guided first‑quarter revenue below expectations, citing weaker‑than‑expected near‑term demand for AI servers as customers push orders into the second half of 2026. [30]
- Oklo
- The nuclear‑tech firm’s shares have dropped around 6% after it announced plans for a $1.5 billion share sale, highlighting how capital‑intensive advanced nuclear projects remain – and how sensitive these early‑stage names are to dilution. [31]
Together, these moves capture the broader tape: investors are still willing to pay up for growth and structural stories (like streaming consolidation and clean energy), but they’re ruthless when near‑term earnings or capital needs disappoint.
Why This PCE Print Matters So Much After the Shutdown and the 2025 Crash
On one level, today’s PCE data look almost boring: headline a touch hot, core exactly on consensus.
But context is everything:
- First major data after a 43‑day shutdown
- A prolonged government shutdown forced agencies such as the Commerce Department to delay key releases on inflation, jobs, and growth, including today’s PCE report. [32]
- That left markets flying somewhat blind on the economy’s true momentum, especially after surprisingly strong jobs data earlier this week muddied the picture for the Fed. [33]
- A year that started with a crash
- Back in April 2025, global markets suffered a sharp tariff‑driven sell‑off as new rounds of trade restrictions triggered recession fears. The S&P 500 briefly dropped into bear‑market territory before massive policy support and hopes for AI‑driven earnings growth helped fuel a recovery. [34]
- Today, with the index again brushing against record highs, PCE is viewed as a sanity check on whether this rally rests on solid disinflation progress or simply on aggressive rate‑cut expectations. [35]
- PCE vs. CPI – why the Fed cares more about today’s report
- While investors still obsess over the Consumer Price Index (CPI), the Fed prefers PCE because it captures a broader basket of spending and adjusts more quickly to changes in consumer behavior. [36]
- That’s why even a “small” deviation in PCE can matter more for policy than an eye‑catching CPI headline.
Put simply, today’s PCE print is a test of the idea that inflation is settling into a 2.5–3% range while the economy avoids recession. If that pattern holds into 2026, the Fed has room to cut slowly without losing credibility. If inflation re‑accelerates, the central bank may be forced back into a more hawkish stance – and the 2025 crash will no longer look like a one‑off event.
What Markets Are Watching Next
With PCE now out of the way, investors will quickly pivot to the rest of Friday’s data docket and the week ahead:
- U.S. personal income and spending for September – critical for gauging whether consumers are still willing to spend in real terms as inflation lingers. TechStock²+1
- University of Michigan consumer sentiment (preliminary December) – a key read on household “vibes” that often correlate with spending and election‑year politics. TechStock²+1
- Credit‑conditions indicators, including revolving credit and delinquency trends that speak to whether higher rates have done more damage beneath the surface than headline spending data show. TechStock²+1
Next week, attention shifts squarely to:
- The Fed’s December policy meeting, where markets almost fully price a 25‑basis‑point rate cut, even as several officials warn against assuming a fixed easing path. [37]
- Updated Fed projections (“dot plot”) for 2026, which will help clarify whether policymakers see today’s PCE reading as compatible with a gentle glide toward 2% or as the early sign of a renewed inflation problem. [38]
For equity investors, this all boils down to three practical questions:
- Does inflation stay in the high‑2% range, or drift back toward 3%+?
- Can earnings growth – especially in AI, tech, and consumer sectors – justify record‑level valuations if rates fall more slowly than hoped?
- How long can the Fed keep cutting without reigniting the kind of inflation that forced extreme tightening in the first place?
None of those questions will be definitively answered today. But the September PCE report has at least passed the first test: it didn’t break the narrative.
For now, stocks, bonds, and the dollar are trading as if the Fed can deliver another cut next week without losing control of inflation – and as if the 2025 crash was a painful detour, not the new normal.
This article is for informational purposes only and does not constitute investment advice or a recommendation to buy or sell any security or financial product.
References
1. www.reuters.com, 2. www.reuters.com, 3. www.investing.com, 4. www.reuters.com, 5. www.reuters.com, 6. www.reuters.com, 7. www.reuters.com, 8. www.reuters.com, 9. www.reuters.com, 10. www.bea.gov, 11. www.investing.com, 12. www.investing.com, 13. www.investing.com, 14. www.investing.com, 15. www.bea.gov, 16. www.marketwatch.com, 17. www.reuters.com, 18. www.reuters.com, 19. www.reuters.com, 20. www.reuters.com, 21. www.marketwatch.com, 22. www.reuters.com, 23. www.reuters.com, 24. www.reuters.com, 25. www.reuters.com, 26. www.reuters.com, 27. www.reuters.com, 28. www.reuters.com, 29. www.reuters.com, 30. www.reuters.com, 31. www.reuters.com, 32. stocks-signal.com, 33. www.reuters.com, 34. en.wikipedia.org, 35. www.marketwatch.com, 36. www.bea.gov, 37. www.reuters.com, 38. www.reuters.com
