As we enter the final stretch of 2025, we enter the second week of December, a historically strong market. Barring some disaster, the S&P 500 should be able to rise for the third year in a row. The index is up nearly 17% year-to-date. Further upside or pullback from here will depend on what happens this week. The last scheduled US Federal Reserve policy meeting of the year, scheduled for Tuesday and Wednesday, will be one of the big events to watch over the coming week. It is also likely to have the most significant impact. The other is gains from two portfolio names, Broadcom and Costco, both of which will be reported after the closing bell on Thursday. 1. Fed meeting: There’s little drama over whether the Fed plans to cut rates Wednesday afternoon. The market is pricing in a quarter-point cut, which will be the third time this year. What investors want to know is how many central bank policymakers oppose it and how they see the economy in 2026. The Federal Reserve releases a summary of its economic forecasts four times a year, with the December meeting being the last of the year. What Fed Chairman Jerome Powell said in his post-board press conference will also be scrutinized, but will it be as important as usual? It’s no secret that Chairman Powell’s term is coming to an end in May, and President Donald Trump has publicly stated that he thinks Powell should be more aggressive in lowering interest rates. At last week’s Cabinet meeting, the president said he planned to name Powell’s successor early next year, after telling reporters days earlier that he knew who he would choose. National Economic Council Chairman Kevin Hassett is considered the most likely candidate. Whoever takes over from Mr. Powell will be in trouble as he tries to find the sweet spot on interest rates while competing sides of the Fed’s dual responsibilities. Inflation remains above the central bank’s long-term target of 2% and the job market is depressed. 2. Earnings: According to FactSet, 99% of S&P 500 companies reported earnings that beat expectations, and 76% reported earnings that beat expectations. 94% of tech companies beat profit expectations and 89% beat sales. However, it was in the industrial sector that profits exceeded expectations the most. The final few companies are expected to report quarterly results this week. Starting with Broadcom, we are interested in learning about the trends surrounding the demand for custom AI chips following the release of Google’s Gemini 3, which is hailed as the leading large-scale language model. Gemini 3 is trained and runs exclusively on Google’s 7th generation tensor processing units (TPUs), which were co-developed with Broadcom. Outside of custom chips, Broadcom’s networking sales could garner a lot of attention, as the bulk of the demand for artificial intelligence will appear in this space, given the need for interconnect solutions as data centers move to rack-scale architectures. Management’s forward guidance toward 2026 will also be an important item to watch. As of Friday, the Street expected Broadcom’s fourth-quarter fiscal 2025 earnings per share (EPS) to rise 31% year over year to $1.86 and revenue to rise 17.5% to $17.49 billion, according to LSEG. As for Costco, the focus will be on management’s comments related to the company’s lawsuit against the Trump administration regarding tariffs, foot traffic, and how they view it in terms of customer basket size and composition. Costco publishes sales data monthly, so they value the additional information they get about sales mix and profit margin trends, but tend to focus less on core sales than other companies. Beyond the reported quarter, updates on Black Friday and Cyber Week sales will help consumers better understand their health and, by extension, the economic outlook for 2026. As of Friday, the Street expected Costco’s fiscal 2026 first-quarter EPS to rise 5.8% year-over-year to $4.28 and revenue to rise 8% to $67.17 billion, according to LSEG. (Jim Cramer’s Charitable Trust is long AVGO, COST. See here for a complete list of stocks.) As a subscriber to Jim Cramer’s CNBC Investment Club, you will receive trade alerts before Jim makes a trade. After Jim sends a trade alert, he waits 45 minutes before buying or selling stocks in his charitable trust’s portfolio. If Jim talks about a stock on CNBC TV, he will issue a trade alert and then wait 72 hours before executing the trade. The above investment club information is subject to our Terms of Use and Privacy Policy, along with our disclaimer. No fiduciary duties or obligations exist or arise from your receipt of information provided in connection with the Investment Club. No specific results or benefits are guaranteed.
