The Paris stock market recorded its twelfth consecutive session of subdued volatility on Tuesday, slipping by 0.37% to around 8,023 points. Technically, the outlook is deteriorating as the CAC40 index has now broken below the 8,050/8,150 corridor.
On Wall Street, the mood remains static: the Nasdaq dipped 0.1%, the S&P 500 was unchanged at 6,840, and the Dow Jones rose 0.5%--the latter recovering after a 0.5% drop the previous day.
The S&P 500 has been locked in a narrow range between 6,800 and 6,880 since November 26, marking 15 days of complete stagnation. The market appears paralyzed by uncertainty over the message set to be delivered by the US Federal Reserve.
Analysts suggest this extended pause does not necessarily signal a loss of upward momentum. Instead, it reflects logical profit-taking after a rapid surge led by technology, consumer, and semiconductor stocks that propelled Wall Street to record highs this autumn.
"Market conditions on the eve of an FOMC meeting are never very lively," notes Michael Brown, strategist at Pepperstone.
"Those preceding the December meeting, as everyone starts preparing for the year-end holidays, are even quieter," he adds.
While a third Fed rate cut in three months is widely expected, the key question is whether the central bank will signal a continuation of its monetary easing cycle into early 2026.
The Federal Reserve's statement, due at 8:00 p.m., will be accompanied by the institution's latest economic projections and followed by a press conference from its chairman, Jerome Powell.
Given the ongoing divergences within the Federal Open Market Committee, investors expect a "restrictive" rate cut--one driven more by caution in response to recent labor market weakness than by a need to support US growth, which remains robust.
Many observers anticipate that Powell will seek to temper expectations for further rapid rate cuts in the year ahead, following three consecutive easings since September.
While tonight's expected rate cut could be the last for some time, it is likely that Powell will avoid unsettling financial markets. His remarks are expected to be measured and reassuring, aiming to maintain investor confidence after a highly successful year for equities.
"If the Fed sends a more dovish signal than anticipated, the market could quickly regain momentum and retest its record highs," highlights Linh Tran, market analyst at XS.com.
"Conversely, if his tone is overly cautious, the S&P 500 risks continuing its gentle consolidation while awaiting new catalysts," she warns.
One telling sign: bond markets have been deteriorating sharply since late November, with no rebound lasting more than a few hours. This morning, the yield on 10-year T-Bonds reached 4.51% before easing back to 4.17% (-2 basis points), while the 2-year yield hovered between 3.625% and 3.605% (-0.8 basis points).
In Europe, French OATs weakened by 1.1 points to 3.5780%, German Bunds by 1 point to 2.8620%, and Italian BTPs by 1.2 points to 3.565%.
The euro gained 0.15% to 1.1645, while Bitcoin slipped 1% to $91,900.
In energy markets, oil prices retreated to their lows, with Brent down 1.1% at $61.40 and WTI down 1.2% at $57.65 on the NYMEX.
