Stock futures remained mostly unchanged Monday night as the major U.S. averages showcased a strong rebound, fueled by optimism surrounding the artificial intelligence sector and increasing expectations for a potential interest rate cut by the Federal Reserve. Futures associated with the Dow Jones Industrial Average gained 4 points, indicating a rise of less than 0.1%. Similarly, S&P futures climbed nearly 0.1%, while Nasdaq 100 futures experienced a modest increase of more than 0.1%.
This positive momentum in stocks marks a robust start to a short trading week, with the S&P 500 surging nearly 1.6% in the previous session. The Nasdaq Composite saw an impressive rise of 2.7%, marking its best performance since May 12, primarily due to a rebound from significant downturns in major tech stocks. The Dow Jones Industrial Average also recorded gains, closing approximately 203 points or 0.4% higher.
In the realm of major tech businesses, Alphabet, the parent company of Google, stood out as a significant performer among the so-called “Magnificent Seven,” ending the day up 6.3%. Chipmaker Broadcom was another standout, becoming the largest gainer in the S&P 500 with a noteworthy surge exceeding 11%. Both companies have attracted investors, thanks to their involvement in high-performance application-specific chips (ASICs). Additionally, Nvidia, which has faced a 10% decline this month despite optimistic reports about sustained AI demand, rebounded slightly with a 2% increase.
Despite this recent uptick, the three main U.S. indexes are still expected to report losses for the month, as concerns regarding tech stock valuations linger. The S&P 500 has experienced a roughly 2% decline in November, while the Nasdaq has dropped by 3.6%. The Dow has also witnessed a downturn of 2.3% so far this month.
Abby Yoder, a U.S. equity strategist at JPMorgan Private Bank, discussed recent market movements during her appearance on CNBC’s “Closing Bell.” She noted the significant sell-off at the end of October, attributing it to liquidity exiting the market. However, she pointed out that within the recent technical recovery of AI and tech-related stocks, there remains a solid fundamental backdrop associated with AI advancements and spending. Yoder expressed optimism about the market’s positioning as the year concludes but cautioned that investors will need to adopt a more discerning perspective moving forward.
In the backdrop of stock movements, traders are closely monitoring developments that could influence the Federal Reserve’s monetary policy. Current market predictions indicate an over 80% likelihood of a quarter percentage point rate cut in December, according to the CME FedWatch Tool. This expectation has gained traction following indications from New York Fed President John Williams, who mentioned that there is scope for reducing rates “in the near term.” San Francisco Fed President Mary Daly also expressed her support for a rate reduction, emphasizing concerns regarding the labor market.
As a reminder, trading will be limited this week, with the stock market closed on Thursday for Thanksgiving Day and an early closure at 1 p.m. ET on Friday.
