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U.S. Futures Edge Higher as Markets Brace for Potentially Contentious Fed Rate Cut

U.S. stock futures traded slightly higher on Tuesday as investors adopted a cautious stance ahead of the Federal Reserve’s final policy meeting of 2025 — a decision expected to set the tone for markets heading into the new year.

At 05:35 ET (10:35 GMT):

  • Dow Jones Futures rose 30 points (0.1%)
  • S&P 500 Futures gained 8 points (0.1%)
  • Nasdaq 100 Futures climbed 25 points (0.1%)

Major indices closed lower on Monday, pressured by a rise in Treasury yields, reflecting investor unease before Wednesday’s policy announcement.


Fed Rate Cut Expected, but “Hawkish Cut” Risks Loom

The Fed begins its two-day meeting Tuesday, with markets widely expecting a 25-basis-point cut — the third since September.

  • CME FedWatch shows ~89% probability of a cut.
  • Economic data continues to signal a cooling labor market and stable but elevated inflation.

However, the decision may be unusually divisive. A government shutdown halted the release of key October–November data, leaving policymakers to decide with limited visibility.

ING analysts warned of “high expectations of a hawkish cut,” meaning the Fed could cut rates but pair the move with cautious messaging on future easing.

Investors will scrutinize the Fed’s economic projections for clues on:

  • The pace of cuts in 2026
  • Growth risks
  • Inflation trajectory

Corporate Focus: Nvidia, Warner Bros Discovery, Paramount Skydance

A handful of companies report earnings Tuesday — including AutoZone, Campbell Soup, AeroVironment, and Cracker Barrel — but markets are likely to pay closer attention to two major headlines:

Nvidia in Spotlight After Trump Approves China Chip Sales

President Donald Trump said he will allow Nvidia to sell its powerful H200 AI chips to approved customers in China and other markets.

  • Sales will carry a 25% tariff
  • Shipments must comply with strict national-security conditions
  • Chinese President Xi Jinping reportedly reacted “positively”

The H200, unveiled in 2023, is roughly six times more powerful than the H20 — Nvidia’s most advanced chip currently permitted for sale in China. This approval could unlock substantial revenue for the world’s most valuable chipmaker.

Paramount Skydance Launches Hostile $108.4B Bid for Warner Bros Discovery

Just days after Netflix won the bidding war for Warner Bros Discovery, Paramount Skydance has unexpectedly countered with a hostile $108.4 billion bid.

Key differences:

  • Paramount’s offer far exceeds Netflix’s $72B deal
  • The bid includes all of Warner, not just TV, film, and streaming
  • Cable networks would also be acquired under the Paramount offer

The move dramatically reshapes the contest for one of Hollywood’s oldest studios and could trigger intense antitrust scrutiny.

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