2025 Dec 22 Pre-Market Analysis: Inflation Stuck Through 2026, Fed Rate Cuts Expected, International Outperformance Case

This analysis is based on the YouTube video published on December 22, 2025 [6], which highlighted Charles Schwab’s Cooper Howard’s market outlook for the holiday-shortened week (December 22–24, 2025). As of the pre-market (06:30 EST) on December 22, U.S. equity futures showed cautious optimism: S&P 500 futures were fractionally higher, and Dow Jones Industrial Average futures were near flat, reflecting market caution ahead of the delayed Q3 GDP release (scheduled for December 23, 8:30 AM EST) [2]. Overseas markets delivered mixed results: Asian markets such as Shanghai’s SSE Composite (+0.16%) and Hong Kong’s Hang Seng (+0.15%) saw minor gains, while other regional bourses traded weakly; Japanese materials stocks Toho Zinc (+12%) and Screen Holding (+10%) surged on supply-demand dynamics [4]. European markets closed lower on December 21 despite a 5-month high in German economic sentiment, indicating lingering macro uncertainty [3]. The U.S. market had extended a 3-session winning streak on December 21, led by tech stocks including Nvidia (NVDA), Broadcom (AVGO), and Amazon (AMZN), which continued their 2025 outperformance [3]. The CBOE VIX (^VIX) closed at ~16.35 on December 21 [5], below its 2025 average (~22) [2], signaling moderate market calm.

Key catalysts identified included the delayed Q3 GDP release, which Howard emphasized as the week’s most critical data [6]. Market expectations were for 3.2% annualized growth [2], though actual results (released December 23) showed a 4.3% surge (excluded from pre-market analysis as a forward-looking catalyst). Howard also noted that inflation is likely to remain “stuck” in a range into 2026 but does not expect this to alter the Fed’s anticipated rate cut path for 2026 [6]. Market pricing as of December 22 still reflected expectations for 2 Fed rate cuts in 2026 [2]. The video’s headline also highlighted a case for incoming international equity outperformance, supported by 2025’s strong performance (Germany, France, UK, Japan equity markets hit all-time highs) and favorable 2026 global economic expectations [6, 3].

1. Tech Sector Leadership Persists
   : The 3-session winning streak led by tech stocks (NVDA, AVGO, AMZN) underscores the sector’s continued dominance in 2025, driven by ongoing growth narratives [3].
2. Inflation Stickiness Does Not Derail Fed Expectations
   : Howard’s outlook indicates that even if inflation remains “stuck” into 2026, market participants do not anticipate this changing the Fed’s rate cut trajectory, reflecting confidence in the central bank’s policy framework [6].
3. International Equities’ Growth Potential
   : The case for international outperformance, supported by 2025’s record highs in major European and Japanese markets, suggests a potential shift in capital allocation away from U.S.-centric positions [6, 3].
4. Holiday Trading Caution
   : The combination of thin trading volumes (due to the holiday-shortened week) and a critical GDP release creates a backdrop where unexpected data could lead to amplified volatility [2].

• Data Surprises
  : Unexpected GDP or inflation data (from the December 23 releases) could shift market expectations for Fed rate cuts, leading to volatility [2].
• Thin Trading Volumes
  : Reduced market participation during the holiday period may exacerbate price swings [2].
• Global Uncertainty
  : Lingering macro uncertainty in Europe, despite improving German sentiment, could weigh on international equity performance [3].

• International Equity Outperformance
  : 2025’s strong performance and favorable 2026 expectations position international equities as a potential growth area [6, 3].
• Tech Sector Momentum
  : The ongoing leadership of tech stocks suggests continued upside potential amid positive growth dynamics [3].
• Commodity Trends
  : Oil price gains (WTI $58.38/barrel, +0.37) due to U.S. blockade of Venezuelan crude shipments and gold’s ongoing rally indicate potential opportunities in commodity markets [1].

This report synthesizes the pre-market (December 22, 2025) market context, where U.S. equity futures traded near flat ahead of the delayed Q3 GDP release. Charles Schwab’s Cooper Howard identified the GDP release as the week’s key catalyst and noted inflation likely remains “stuck” into 2026 without altering Fed rate cut expectations. The market exhibited cautious optimism, supported by a 3-session tech-led winning streak and moderate calm (VIX below 2025 average). Overseas markets were mixed, with Asian materials stocks showing strong gains. The case for international equity outperformance was highlighted, driven by 2025’s record highs and favorable 2026 expectations. Risks include data surprises and thin holiday trading volumes, while opportunities include international equities and tech sector momentum.