Stock market ekes out modest 0.3% gains as S&P 500 rallies and mysterious Fed rate cut decision looms this week

The stock market eked out modest gains last week as the S&P 500 rallied 0.3%, signaling controlled optimism ahead of a critical Federal Reserve interest rate decision. With inflation cooling and investor focus sharpened on monetary policy, major indices maintained steady upward momentum despite ongoing economic uncertainties.

Stock Market Extends Winning Streak on Fed Optimism

The S&P 500 finished the week ending December 5 up 21.31 points or 0.3%, marking the second consecutive weekly gain. The broader market showed steady resilience despite uncertainties looming over economic growth.

Investors rotated heavily into corporate stock positions after tame PCE inflation data arrived Friday morning. The core Personal Consumption Expenditures index rose just 0.2% for the month, keeping the annual inflation rate at a manageable 2.8%.

Technology Sector Leads Tech-Heavy Nasdaq Higher This Week

The Nasdaq Composite demonstrated particular strength, climbing 0.9% for the week. This outperformance signals investor confidence in growth-oriented technology names despite macro headwinds.

According to Investopedia, the tech-heavy index finished Friday trading up 0.3% on its own, reflecting sustained momentum into the closing bell. The Nasdaq 100 advanced 1% throughout the week, outpacing both the S&P 500 and Dow Jones significantly.

Market Performance Breakdown and Index Comparison

Index	Weekly Gain	Points
S&P 500	+0.3%	+21.31
Nasdaq Composite	+0.9%	+212.44
Dow Jones Industrial Average	+0.5%	+238.57
Russell 2000 (small-cap)	Record High	New Peak

Federal Reserve Rate Cut Expected as Inflation Cools This Week

The December 9-10 FOMC meeting looms as the most anticipated event driving market sentiment. Markets are pricing in an 87% probability of a quarter-point (25 basis point) Fed rate cut, according to the CME FedWatch Tool analysis.

Reuters reported that expectations for rate cuts climbed from just 63% earlier in the week to 89.2% after Friday’s positive PCE report. Economic policymakers have signaled openness to another rate cut, bringing the target range to approximately 3.75%-4.00% if approved.

Analysts caution that while a cut appears likely, Federal Reserve officials express growing divisions about the appropriate path forward, according to Morning Star reporting. The bond market has whipsawed significantly this past month, reflecting uncertainty among policymakers about inflation trajectory and labor market strength.

What Does This Modest Rally Mean for Your Portfolio This Upcoming Quarter?

The 0.3% weekly advance in the S&P 500 represents controlled market behavior rather than aggressive bullish enthusiasm. Investors remain cautious ahead of Fed announcements Wednesday at 2:00 PM EST on December 10.

Seeking Alpha noted the S&P 500 showed “signs of waning momentum after a strong prior surge,” suggesting consolidation rather than explosive gains. Market breadth remains positive with the index recording four consecutive days of gains, yet defensive positioning indicates investors are hedging bets on policy direction.

“The S&P 500 eked out a 0.3% gain last week, showing signs of waning momentum after a strong prior surge.”

— Seeking Alpha, December 7, 2025 Market Report

Sources

• CNBC – S&P 500 and market performance tracking
• Reuters – Federal Reserve rate cut expectations analysis
• Yahoo Finance – Weekly index performance metrics