JPMorgan Selloff Drags Dow as US Stocks End Mixed Ahead of Fed Rate Decision

U.S. stocks finished mixed in subdued trading ahead of the Fed rate decision. The Dow industrials fell 179.03 points, or 0.38%, to 47,560.3, while the S&P 500 slipped 6.00 points, or 0.09%, to 6,840.51. The Nasdaq Composite added 30.58 points, or 0.13%, to 23,576.5, and the Russell 2000 rose 0.52 point, or 0.21%, to 251.39, in line with the indication that small-caps outperformed.

Within the Dow, JPMorgan Chase was a notable drag. The bank’s presentation at the Goldman Sachs Financial Services Conference worried investors and shares fell 4.16%, dropping from roughly $317 to the $300 level in a single session after management outlined 2026 firm wide expenses of about $105 billion. That guidance was materially above Wall Street expectations. JPMorgan is one of the most influential components of the Dow Jones Industrial Average and the stock’s more-than-4% decline weighed heavily on the index.

The Federal Reserve’s final policy meeting of 2025 is shaping up as a test of how far officials are willing to guide markets into 2026—and how much tightening in financial conditions they still want. The Federal Open Market Committee began its last meeting of the year on Tuesday and is set to release its policy statement and an updated Summary of Economic Projections on Wednesday. Futures markets put the odds of a rate cut this week in the high-80% to 90% range, while the CME futures curve implies only about a 25% chance of another move in January and a loose cluster of expectations for one to three cuts in 2026, the materials note.

Analysts describe the prevailing expectation as a “hawkish cut”: the Fed trims the federal-funds rate now but signals a long pause to follow. Goldman Sachs is a notable outlier, arguing that Chair Jerome Powell could keep the door open to a January cut, an outcome the materials characterize as an upside risk for equities in a market braced for tougher rhetoric.

The Federal Reserve’s September Summary of Economic Projections laid out only a gentle path lower for interest rates. According to that document, the median projections envisioned real gross domestic product growth of 1.8%, unemployment at 4.4%, and both headline and core personal-consumption-expenditures inflation at 2.6% in 2026, with the federal-funds rate at 3.4%. By 2027, the Fed’s median outlook nudged growth to 1.9%, edged unemployment down to 4.3% and brought inflation to roughly 2.1%, while the policy rate was expected to drift only to 3.1%.

Against that backdrop, corporate signals from technology and housing underscore how higher-for-longer rates are colliding with powerful sector-specific forces. Broadcom heads into its upcoming earnings report “with as much AI momentum, and as much pressure, as any name in the semiconductor complex,” according to the semiconductor and software commentary in the materials. The stock has climbed more than 70% year to date, with investors looking for roughly 24%–25% revenue growth and low-30s percentage growth in adjusted earnings per share. Management has guided to about $17.4 billion in fiscal fourth-quarter revenue, including $10.7 billion from semiconductors and $6.7 billion from infrastructure software, with AI semiconductor revenue of roughly $6.2 billion.

In housing, Toll Brothers offers a more cautious read on an economy wrestling with high borrowing costs. The company’s latest fiscal fourth quarter was supposed to be a victory lap for the luxury end of U.S. housing but instead underscored that even million-dollar buyers are exposed to high prices, sticky mortgage rates, and fading pandemic tailwinds. Toll reported fiscal fourth-quarter earnings per share of $4.58, about 6% below consensus estimates, even as revenue of $3.42 billion edged past expectations. The company delivered 3,443 homes in the quarter, essentially flat from a year earlier, at an average price just under $1 million, and generated full-year home sales revenue of about $10.8 billion on 11,292 deliveries.

Operating income was $564 million for the quarter and $1.72 billion for the year, with full-year EPS of $13.49, which the materials describe as slightly below last year’s adjusted figure but still strong for a builder operating in what management calls a “choppy environment.” Pressure is more visible in margins: fourth-quarter home-sales gross margin came in at 25.5%, down from 26.0% a year earlier, while adjusted home-sales gross margin slipped to 27.1% from 27.9%.

Together, the Fed’s projections, Broadcom’s AI-driven capital-spending cycle and Toll Brothers’ narrowing margins sketch an economy where policy rates may be lower than today but remain elevated, and where sector-specific strengths are increasingly tested by the cost of money and the durability of demand.

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