Your Capital Markets Snapshot: Markets React Positively to Fed Messaging

Last week, markets responded positively to the Federal Reserve’s meeting, with the rally driven more by the central bank’s messaging than the widely expected 25 basis point rate cut. Small-cap equities outperformed, while tech stocks lagged due to concerns over AI spending and mixed earnings reports. The week closed with mixed equity performance, as cyclical and value stocks climbed, but growth and tech names lagged. The Fed signaled a likely pause in its easing cycle but remained open to further cuts if labor market weakness persists. Markets continue to price in lower rates for 2026, with current expectations pointing toward one to two additional cuts during the year. By committing to buy Treasury bills to support short-term liquidity, the Fed delivered what many market participants interpreted as a dovish move. The yield curve continued its recent steepening with shorter term rates slightly falling and longer-term rates rising. Oil prices fell sharply, while silver surged to record highs.