Stock Market Today: Dow Wavers Ahead Of Fed Minutes; Palantir, Tesla Bounce (Live Coverage)

Stock futures edged lower Tuesday as Wall Street turned its focus to the release of the Federal Reserve's December FOMC minutes. The market's cautious waver reflects a wait-and-see stance on the central bank's internal debate, with the minutes set to test whether the policy pause is a consensus or a minority view. The immediate backdrop is one of uncertainty, as the Fed's recent 25-basis-point rate cut was the first split decision since September 2019, highlighting deep divisions over whether to prioritize inflation or a weakening labor market.

The significance of the minutes cannot be overstated. They will reveal the 9-3 vote for the rate cut, with three dissenters-two who wanted no change and one who advocated for a larger half-point reduction. This split shows "fairly broad support" for the cut, but also a meaningful minority prioritizing inflation caution. As Fed Chair Jerome Powell noted, "you just have people who have strong views" about which risk needs more policy attention. The market now seeks clarity on whether this was a one-off divergence or the start of a more fractured path for 2026 easing.

This internal debate is mirrored in investor sentiment, which shows a market not yet fully committed to a new trend. The AAII Investor Sentiment Survey for the week ending December 24 showed a bullish reading of 37.4%, down from recent highs and below the historical average. This reading indicates a cautious, balanced outlook, with nearly equal bearish and neutral views. It suggests that while the AI growth thesis has its champions, a broader market conviction is still forming, awaiting clearer signals from the

Fed's policy direction.

The bottom line is that the minutes will be a critical filter for the AI investment thesis. A Fed that signals a pause, citing persistent inflation, would test the resilience of growth stocks reliant on low rates. Conversely, minutes that frame the cut as "insurance" and emphasize labor market risks could reinforce the case for continued capital deployment into high-growth sectors. For now, the market is holding its breath.

Stock Performance Analysis: Palantir and Tesla

Two of the market's most talked-about names are delivering wildly different stories in 2025. Palantir Technologies has been a relentless AI growth story, with its stock climbing roughly 145% year-to-date. Tesla, after a brutal start to the year, has staged a remarkable comeback, surging from a 36% plunge in the first quarter to reach an all-time high of $489.48. Both are trading at extreme valuations, reflecting sky-high expectations for future growth.

Palantir's rally is built on a foundation of explosive, AI-driven revenue acceleration. The company's latest earnings showed revenue of $1.18 billion for the quarter ended September 30, a 63% year-over-year jump. The real engine is its commercial business, where U.S. sales exploded 121% to $397 million. This performance has allowed Palantir to raise its annual sales forecast for the third time this year. A massive $10 billion deal with the U.S. Army in July 2025 provided a major tailwind, while partnerships with Nvidia and others position it at the center of the AI infrastructure buildout. The stock's valuation, however, is staggering, trading at a trailing price-to-earnings ratio of 425x. This premium reflects a bet that its growth trajectory is just beginning.

Tesla's resurgence is a tale of narrative re-rating. After a difficult first quarter, the stock found a powerful new catalyst in news of its autonomous driving ambitions. CEO Elon Musk announced that Tesla has been testing driverless vehicles in Austin, Texas with no occupants on board, a significant step toward its robotaxi vision. This development, coupled with a raised price target to $548 from Mizuho, has reignited investor enthusiasm. The company's market cap has ballooned to $1.63 trillion, making it the seventh-most valuable public company. Yet the fundamental challenges remain: a consumer backlash against Musk continues to pressure sales, and the company faces intense competition.

The bottom line is a market rewarding different stories with extreme valuations. Palantir is being paid for its AI revenue growth and government moat, while Tesla is being paid for its potential to monetize autonomous technology. Both setups are precarious, as they require flawless execution to justify their current prices.

Broader Economic Outlook and Investor Sentiment

The stock market's recent volatility and the Federal Reserve's divided policy path are unfolding against a backdrop of slowing economic momentum. The Conference Board's Leading Economic Index (LEI) declined again in September, falling 0.3% to 98.3 for the second straight month. This contraction, which marks a faster pace of decline over the prior six months, points to weakening expectations from consumers and businesses. The index suggests slowing economic activity at the end of 2025 and into early 2026, a forecast that aligns with a broader view of a fragile and uneven growth path.

This economic softening is directly fueling the Fed's internal debate. The central bank's December meeting was split, with three dissenters on a 9-3 vote to cut rates. The division highlights deep uncertainty over which risk to prioritize: persistent inflation or a weakening labor market. As Fed Chair Jerome Powell noted, the decision reflected "fairly broad support" but also "strong views" on policy direction, with two presidents voting against any cut and one advocating for a larger half-point reduction. The minutes, expected to be released soon, will detail these tensions, which are now a key source of market uncertainty.

The divergence between the Fed's cautious forecast and market pricing is stark. While policymakers' median projection calls for just one more rate cut in 2026, traders are pricing in at least two. This gap creates a persistent risk of disappointment. The market's skepticism is understandable given recent data, which has shown a cooling labor market and softer price growth. Yet the Fed's wait-and-see stance, coupled with thin year-end trading, means any hint in the minutes that a majority of officials are prepared to hold rates steady could trigger a sharp selloff as sentiment sours.

The bottom line is a market navigating conflicting signals. Economic data points to a slowdown, which should support lower rates. But the Fed's internal divisions and its own forecast are holding the line. For investors, the setup is one of elevated risk: the path of least resistance for stocks may be down if the Fed's hawkish tilt is confirmed, even as the underlying economic data suggests a need for stimulus.