Canada stocks higher at close of trade; S&P/TSX Composite up 0.54%

1609 ET - Oracle spoils the post-Fed party, at least for the tech stocks, driving Nasdaq down while other indexes rise. The cloud-computing company falls 11% after it raised its spending forecast. Nvidia falls 2% after Oracle's chair Larry Ellison said his company would use chips from other makers if customers prefer. Adobe gains 2% on better-than-expected earnings. Walt Disney rises 2% after unveiling a three-year licensing deal with OpenAI. Treasury yields and the dollar fall. Gold rises 2%. Nasdaq trims early losses and falls slightly, to 23594. DJIA sets a new record, adding 646 points, or 1%, to 48704. The S&P 500 rises 0.2%, to 6901. (paulo.trevisani@wsj.com; @ptrevisani)

1540 ET - Treasury yields and the dollar edge lower a day after the Fed cut rates and led markets to believe policymakers are more worried about declining employment than sticky inflation. A January hold is priced at 76% odds, although bets on a cut are rising. No major data set is due tomorrow. Weekly jobless claims rise more than expected. At around 3 p.m. ET, the 10-year yield was at 4.14% and the two-year at 3.53%, both up from earlier lows, according to FactSet. The WSJ Dollar Index falls 0.2% as the dollar weakens 0.7% against the Swiss franc, 0.4% versus the euro and 0.3% to the yen. (paulo.trevisani@wsj.com; @ptrevisani)

1444 ET [Dow Jones]--Ethanol producers crushed 476.4 million bushels of corn to make the fuel in October, up from 435.4 million bushels in September and from 463.6 million bushels in the year-earlier month, the USDA reports. Randy Mittelstaedt of StoneX notes a slight decline in the use of sorghum for ethanol in recent months. "While minor, each bushel of sorghum used in the ethanol production mix is essentially a bushel lost of corn demand so the recent trajectory of sorghum usage is pushing a bit more corn into the mix." Ethanol/corn yield has also edged down which "has the impact of requiring a bit more corn usage per gallon of ethanol produced," he adds. StoneX estimates that weekly ethanol production for the 2025-26 marketing year would need to average 1.115 million barrels a day to meet the USDA's 5.6 billion-bushel corn for ethanol usage estimate, or 3.8% more than last year's December-August production. (anthony.harrup@wsj.com)

1331 ET - Oxford Industries' cutback of China-supplied products earlier this year is making its Lilly Pulitzer brand less flashy, Chief Executive Thomas Chubb tells analysts. In the spring, when tariffs looked like they could be more than 100% on goods from China, Oxford's brands reduced inventory from the country. "China is where we make a lot of our more embellished kind of novelty type stuff, things with sparkles and rhinestones and bows and that kind of stuff," Chubb says. "We've just got less of that stuff." As a result, Chubb says consumers are looking at a more "tame" collection from Lilly Pulitzer, which is known for its eye-catching apparel. (katherine.hamilton@wsj.com)

1321 ET - Oxford Industries' inventory is still recovering from the era of high China tariffs, even though rates have since fallen, Chief Executive Thomas Chubb tells analysts. Oxford's brands, such as Tommy Bahama and Lilly Pulitzer, stocked up in the spring for the current winter holiday season. At that time, "the tariff landscape was highly uncertain with the potential for substantial increases on certain China-origin categories," Chubb says. The brands cut back how much inventory they bought from China, including sweaters and cold-weather products. The reduced inventory is a headwind, as sweaters in particular drove prior 4Q sales, Chubb says. Oxford Industries tumbles 20%. (katherine.hamilton@wsj.com)

1312 ET - Nike's Amazon storefront is a clear signal that the sportswear retailer is re-engaging with value-conscious consumers, BofA Securities analysts say in a note. The company's shop on Amazon is heavily skewed toward footwear priced under $100, and lists no premium lifestyle or specialty products, the analysts say. Nike previously walked away from value-conscious consumers, who represent a market segment worth billions, the analysts say. The strategy could attract consumers trading down, while avoiding any cannibalization of Nike's popular styles sold directly to consumers, they say. (kelly.cloonan@wsj.com)

1303 ET - Nike's F3Q revenue guidance will be the crucial metric shared during its next earnings call, adding to a key debate over the timing of the retailer's sales inflection, BofA Securities says in a note. After the sportswear retailer spent the last year cleaning up excess inventory and ramping up innovation, it should begin a sales inflection in F3Q as it benefits from strong wholesale sell-in, early World Cup demand and lapping buybacks from wholesalers, the analysts say. Still, the metric could be hurt by continued traffic loss from lower promotions in its direct-to-consumer channel, they say. "A message of stronger sales trends coupled with commentary that inventory is clean would confirm our view that the recovery is progressing," they say. (kelly.cloonan@wsj.com)

1245 ET - Visa shares are up 5% to $341.30, following an upgrade to buy from neutral at BofA Securities with comments that it's undervalued. Visa is one of two S&P 500 companies that has delivered 10%-plus revenue and EPS growth and 50%-plus operating margins since 2021, yet the stock has underperformed the S&P 500 by 25% or more since June, the analysts say. On top of that, stablecoins are a growth opportunity for Visa, as BofA thinks stablecoin will be used more for cross-border business-to-business payments, rather than causing consumers to shift away from card payments. (katherine.hamilton@wsj.com)

1213 ET - Inflation could fall to 2.2% next year, just above the Fed's 2% target, allowing the central bank to cut interest rates to support employment, Ameriprise's Russell Price says. "I'm more worried about the job market than I am about inflation," he says. Year-over-year comparison for post-tariff prices and a deceleration in shelter cost increases are among the factors that could cool down inflation, he says. Risks to employment include small businesses' reluctance to hire in face of economic uncertainty, the need to offset tariff costs and the expansion of AI, Price says. (paulo.trevisani@wsj.com; @ptrevisani)

1212 ET - A potential acquisition of E.W. Scripps by Sinclair would create a local-television-station company with significant scale, but a merger could carry risks for shareholders of both companies, JPMorgan analysts say. Sinclair would need to successfully create significant synergies from the merger to carry the high debt burden it accepts from Scripps. Meanwhile, the risk for Scripps shareholders comes if they receive equity as part of the merger. That would require confidence that the new company will successfully generate those synergies and that the broadcast industry sustains present valuations, which are currently being boosted by favorable regulatory changes, the analysts say. (nicholas.miller@wsj.com)

1211 ET - The outlook for Treasury yields next year depends on diverging inflation forecasts, Ameriprise's Russell Price says. Some analysts see inflation hovering around 3%, which could hurt demand for long-term Treasurys, pushing yields higher, as it would raise the prospect of hikes down the road. Others, including Price, expect inflation to fall close to 2%, making monetary easing more certain with little downward impact on demand for Treasurys. Price forecasts "pretty considerable and pretty rapid progress" on inflation. He expects the dollar to weaken 2% to 5%, as the Fed cuts rates. (paulo.trevisani@wsj.com; @ptrevisani)

1202 ET - Prediction markets are growing under the Trump Administration. Gemini Space Station, which said Wednesday it obtained a license to operate prediction markets, thanked the White House for being more open to innovation in crypto and prediction markets. Since President Trump took office, prediction markets have become more mainstream, with sports-betting companies including DraftKings and FanDuel jumping into the industry. The Commodity Futures Trading Commission, which regulates prediction markets, has undergone leadership changes under the new administration. Acting CFTC Chair Caroline Pham has critiqued prior CFTC leadership for being "anti-innovation" and she has loosened some regulations, like allowing crypto as collateral for derivative markets. (katherine.hamilton@wsj.com)

By Martin Baccardax

Federal Reserve Chairman Jerome Powell may not be anyone's idea of jolly, but he has still left something of a gift for Wall Street as Christmas approaches.

Investors haven't unwrapped it just yet, distracted by piecing together the year's sprawling artificial-intelligence trade.

But the message from Powell is clear enough: the Fed is likely to stay out of the market's way.

Powell told reporters in Washington on Wednesday, following the Fed's third consecutive rate cut since the summer, that the risks to its twin mandate of full employment and stable prices are largely in balance. He agreed that there's a high bar for more cuts but said that doesn't mean the next move in rates will be higher.

In effect, he's saying that the Fed isn't going to get too involved in markets over the final months of his tenure as chair, which ends in May. Rate traders seem to agree: the earliest they're pricing in a cut in 2026 is April, according to the CME Group's FedWatch.

"While 2026 may not bring as many rate cuts as 2025, it's clear that the Fed's prior hiking cycle that disrupted markets and the economy post-Covid is firmly in the rearview mirror," said Chris Kampitsis, managing partner at Barnum Financial Group. "That's bullish for stocks."

Right now, it's just the Dow Jones Industrial Average that's reflecting that optimism. Unloved on Wall Street but famous on Main Street, the Dow hit 48,700 points on Wednesday and looks set for its 18th record high of the year.

Elsewhere, Oracle's 11% slump, one of its biggest post-earnings decline since 2001, is holding down gains for the S&P 500 and the tech-focused Nasdaq.

But perhaps not for long. The second half of December is typically one of the strongest of the year for stocks, with Bank of America data suggesting the final 10 days usually see the S&P 500 rising around 1.17%.

That would take the benchmark to within just a few points of the 7,000-point mark by the end of the year and peg its 2025 advance at around 19%.

Looking further ahead, corporate earnings are set to grow by around 14% next year, according to forecasts collected by LSEG, and the economy remains remarkably resilient.

In fact, the Fed lifted its near term projections for GDP growth on Wednesday, forecasting a 2.3% advance in 2026 while keeping its outlook for headline unemployment unchanged at 4.4%.

AI investment continues to expand, as well, and that is likely to drive faster adoption of the new technology that will quicken the pace of returns for the billions in capital already committed.

"These factors can easily push the U.S. economy beyond our forecast of 2.25% growth — toward 3% — and support a double-digit return for U.S. equities," Vanguard economists, led by Joseph Davis, wrote in a recent outlook.

"Even at current stretched valuations, such momentum wouldn't be unprecedented, especially if AI scalers continue to grow earnings," the team added.

And Nancy Tengler, CEO and CIO at Laffer Tengler Investments, isn't even sure the market's most important stocks, the so-called Magnificent 7, are actually that expensive.

Removing Tesla from the Mag 7 complex, she argues, presents a price-to-earning ratio for the rest of the cohort of 32x, "healthy, but hardly bubble territory."

Doing the same ex-Tesla calculation for earnings growth, she argues, produces a PEG ratio of 1.9x, "within the average range for the overall market."

"Our investing theme is focused on old economy companies pivoting to the new technologies and the providers of the 'picks and shovels'," she said. "We still believe in the aspect of the trade that includes many of the Mag 7."

And that might be the gift that keeps on giving well into next year and beyond.

Write to Martin Baccardax at martin.baccardax@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.