The Federal Reserve has cut interest rates by 25 basis points, bringing the target range to 4.25% to 4.5%. This move was expected, but what really caught everyone off guard were the updated economic forecasts.

Chair Jerome Powell's comments dashed hopes for aggressive easing in 2025. The Fed raised its inflation projections, suggesting we might only see two rate cuts next year. That’s a big change from what many investors had anticipated.

During the press conference, Powell made it clear that after a 100-basis-point reduction in 2024, the Fed would enter a "new phase" of monetary policy. He emphasized the need for a cautious approach as rates approach neutral levels. This message took the wind out of the sails for those hoping for a Santa Claus Rally, which usually sees stocks rising in late December.

The S&P 500, tracked by the SPDR S&P 500 ETF Trust (SPY), dropped 3%. This was its worst single-day decline since September 2022. Meanwhile, the U.S. Dollar Index soared to a two-year high as investors adjusted their expectations.

Bitcoin (BTC/USD) also felt the impact. It fell below $100,000 after hitting a record high of $108,388 just a day before the Fed's meeting.

On Friday, there was a brief moment of relief when the Fed's preferred inflation measure for November came in lower than expected. However, the effects of the Fed's decisions linger, and it will take sustained progress in disinflation to heal those wounds.

Looking ahead to 2025, investors are preparing for the fiscal policies of the incoming Trump administration, the potential for a government shutdown, and the broader implications of Fed monetary policy.

In other news, ChargePoint Holdings Inc. (CHPT) and General Motors Co. (GM) have teamed up to deploy ultra-fast EV charging stations at key locations across the U.S. This collaboration aims to strengthen electric vehicle infrastructure and encourage wider adoption of EVs.

Palantir Technologies Inc. (PLTR) saw its stock surge after landing a significant deal with the U.S. Army and joining the Nasdaq-100 index. Year-to-date, the stock has gained over 340%.

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