Stocks experienced volatility at the start of trading on Friday, but began to rise significantly following remarks from New York Fed President John Williams, which alleviated concerns regarding potential interest rate cuts. Despite this late-week recovery, the main stock indexes recorded considerable losses for the week, setting them up for their most challenging November in several years.
The Federal Reserve had previously lowered the federal funds rate by a quarter-percentage point during its meetings in September and October. A month ago, futures traders were nearly unanimous, assigning a 98% probability to another rate cut at the upcoming December meeting. However, expectations have shifted recently after Fed Chair Jerome Powell indicated that a rate cut in December was not guaranteed, and the strong September jobs report contributed to growing uncertainty.
According to data from CME FedWatch, the likelihood of a quarter-point rate cut during the Fed’s next meeting on December 10 had surged to 72%—a notable increase from 39% just one day prior—after Williams mentioned in his speech that he believes there is “room for a further adjustment in the near term” to align interest rates more closely with neutral levels.
Williams noted that “the downside risks to employment have increased as the labor market has cooled,” while the upward pressures on inflation appear to have diminished somewhat. He further explained that the ongoing decline in underlying inflation is being observed without signs of significant second-round effects stemming from tariffs.
In addition to Williams’ comments, supportive economic data contributed to the upward movement in stock prices. Flash Purchasing Managers’ Index (PMI) readings indicated the fastest pace of growth in November since July, which raised optimism regarding the resilience of corporate earnings. Both S&P Global’s Flash Composite PMI and Services PMI reached four-month highs this month, suggesting a robust U.S. economy and estimated annualized GDP growth of about 2.5% so far in the fourth quarter, according to Chris Williamson, chief business economist at S&P Global Market Intelligence.
However, not all economic indicators were positive. The Flash Manufacturing PMI saw a drop to a four-month low, raising concerns about slower new orders growth and an accumulation of unsold inventory among manufacturers.
At the market close, the tech-heavy Nasdaq Composite gained 0.9%, finishing at 22,273. The broader S&P 500 rose by 1.0% to 6,603, while the blue-chip Dow Jones Industrial Average climbed 1.1% to end at 46,245.
In stark contrast to the recovery seen in stocks, bitcoin’s value fell to its lowest level since April, dropping 2% to $84,432. This decline represents approximately a 33% decrease since bitcoin’s peak of over $126,000 in early October. Louis Navellier, chairman and founder of Navellier & Associates, reacted to the slump in the crypto sector, describing it as the most severe decline since 2022. He noted that this downturn could be indicative of risk sentiment, which has resulted in significant liquidations among traders and a broader selloff across alternative cryptocurrencies.
Despite the steep decline, Bernstein analyst Gautam Chhugani expressed a more optimistic outlook, stating that he believes institutional—eventually sovereign—ownership of bitcoin represents a structural long-term trend, with current price movements reflecting only a relatively minor and short-term correction.
In individual stock news, Gap Inc. saw a notable surge with its shares jumping 8.2% after reporting third-quarter earnings and revenue that surpassed expectations, as well as a same-store sales increase of 5%. The company also raised its full-year sales forecast, contributing to a nearly 27% increase in its stock price from mid-October lows. Morgan Stanley analyst Alex Straton reiterated her Overweight (Buy) rating on Gap after its earnings report, raising her price target from $30 to $31, which suggests potential upside of 24% from current levels. She noted that the Q3 results indicate that management’s brand revitalization efforts are yielding consistent performance improvements.
