Will the Federal Reserve cut interest rates by 25 basis points? Will Oracle and Broadcom's earnings reports boost their stock prices? [Weekly Preview]

TradingKey - Last week, the S&P 500 posted a meager 0.31% cumulative gain after four consecutive days of slight increases, while streaming giant Netflix’s $72 billion acquisition of Warner Bros. sparked widespread market discussion.This week, the Federal Reserve's policy meeting will be in focus, with markets widely anticipating a 25 basis point interest rate cut. On the equities front, Broadcom (AVGO) and Oracle (ORCL) are set to release their fiscal third-quarter 2025 earnings,offering investors a crucial window into the health of AI infrastructure investment.

 Key Events Preview

Fed's December FOMC Rate Decision and Powell's Remarks

The Federal Reserve is scheduled to announce its December interest rate decision this Thursday, followed by a press conference with Chair Powell. Markets are pricing in an 84% probability of a third 25 basis point rate cut by the FOMC, bringing the cumulative easing for the year to 75 basis points.

Mark Cabana, a former New York Fed repo specialist and Bank of America interest rate strategist, forecasts that in addition to the widely anticipated 25 basis point rate cut, Federal Reserve Chair Powell will announce a plan next Wednesday to purchase $45 billion in Treasury bills (T-bills) monthly. This bond-buying operation, slated to officially commence in January 2026, aims to inject liquidity into the system and prevent a further surge in repo market rates.

 Broadcom, Oracle Earnings to Test AI Infrastructure Momentum

Broadcom and Oracle are both scheduled to release their fiscal third-quarter 2025 earnings this week. Both companies remain key barometers for AI infrastructure investment sentiment, though market attention will diverge. Broadcom, a core design partner for Google's TPUs, is widely expected to report results significantly exceeding consensus. Oracle, however, will be scrutinized for whether its Cloud Infrastructure (OCI) growth can truly "take off" and how it plans to manage substantial capital expenditure pressures from large contracts, such as those with OpenAI.

These earnings reports will not only impact individual stocks but also provide crucial validation for the next phase of the AI hardware supply chain (Broadcom) and cloud services sector (Oracle). Despite not being peak earnings season, these results will significantly influence the direction of the broader "AI narrative."

 RBA, BoC Expected to Hold Rates Steady

The Reserve Bank of Australia (RBA) is anticipated to keep interest rates unchanged after its two-day policy meeting concludes on Tuesday. However, traders will scrutinize the accompanying statement for any hawkish shifts, as many economists expect a firmer tone following robust demand and inflation data.

The Bank of Canada (BoC) will announce its interest rate decision on Wednesday, with market consensus largely expecting rates to remain unchanged at 2.25%, particularly given recent robust economic data. Doug Porter, an economist at BMO Capital Markets, noted that strong November employment figures, combined with better-than-expected third-quarter GDP data, have effectively eliminated any possibility of a near-term rate cut from the BoC.

Selected Economic Data

Monday: RBA Interest Rate Decision

Tuesday: Bank of Canada Interest Rate Decision

Thursday: Federal Reserve Interest Rate Decision

Key Events This Week

Tuesday: ECB President Christine Lagarde Speaks

Thursday: Federal Reserve Chair Powell Holds Monetary Policy Press Conference

Friday: FOMC Voter and Philadelphia Fed President Harker Speaks

Company Earnings

Tuesday: GameStop (GME)

Wednesday: Oracle (ORCL), Adobe (ADBE)

Thursday: Broadcom (AVGO), Costco (COST), Lululemon (LULU), and others report earnings