On December 16, most European and U.S. stocks declined as the Federal Reserve unexpectedly signaled a hawkish stance. Additionally, reports indicate that U.S. President Trump will interview another Fed chair candidate—Governor Christopher Waller—on Wednesday. Early on December 17, gold opened slightly lower before sharply rebounding into positive territory.
The three major U.S. stock indices showed mixed performance: the Dow fell 0.62%, the S&P 500 dropped 0.24%, while the Nasdaq gained 0.23%.
Johnson & Johnson and UnitedHealth Group led the Dow’s decline, falling over 2%, while Tesla Motors surged more than 3% and Facebook rose over 1%.
Among China-concept stocks, the Nasdaq Golden Dragon China Index dipped 0.34%. Individual movers included Pony.ai, up over 7%; Hesai Technology, up over 3%; Kingsoft Cloud, up over 2%; Full Truck Alliance, up over 1%; and Canadian Solar, up over 1%.
Gold prices saw a quick turnaround—spot gold opened slightly lower before rallying firmly above $4,300.
Despite U.S. Labor Department data on December 16 showing November’s unemployment rate at its highest since October 2021, Fed officials abruptly adopted a hawkish tone.
Atlanta Fed President Raphael Bostic noted that while the U.S. labor market is cooling, he does not expect a sharp slowdown. He warned that prolonged failure to meet inflation targets could "seriously damage" the Fed’s credibility.
Bostic argued that further rate cuts risk pushing monetary policy into accommodative territory, endangering inflation control.
Meanwhile, reports suggest President Trump will interview Fed Governor Christopher Waller as a potential chair candidate. Officials indicated the process is moving quickly, though Trump remains undecided, meaning the meeting could be postponed or canceled.
In a sudden shift, former Fed Governor Kevin Warsh has overtaken Kevin Hassett as the frontrunner for the nomination. Prediction platform Kalshi shows Warsh’s odds rising to 47%, while Hassett’s fell to 41%.
Notably, Trump has repeatedly demanded deeper rate cuts despite the Fed’s cumulative 75-basis-point reduction this year. He has even suggested the Fed consult the president on rate decisions.
Hassett, however, has defended Fed independence, stating his ties to Trump should not count against him.