Markets Brace for Key Inflation Data After Fed Rate Cut and Hawkish Outlook

The Federal Reserve's cautious stance on rate cuts for 2025 and upcoming inflation metrics weigh heavily on stocks and investor sentiment.

The Federal Reserve announced a third rate cut of 2024, reducing rates by 0.25%, but signaled only two rate cuts for 2025, fewer than previously anticipated.
Major U.S. stock indexes experienced sharp declines following the Fed's announcement, with the Dow dropping 1,100 points and the S&P 500 seeing record post-Fed decision losses.
Investors are closely monitoring the release of November's Personal Consumption Expenditures (PCE) price index, the Fed's preferred inflation measure, expected to show annual inflation above its 2% target.
Biotech stocks faced significant pressure due to their sensitivity to interest rates, with key indexes like XBI and SPBIOS falling over 4%, raising concerns about funding challenges for startups in the sector.
Mexico's central bank cut interest rates for the fourth consecutive meeting, citing slowing inflation, while analysts warn of risks tied to U.S. economic policy under the incoming Trump administration.