The U.S. stock market experienced an uptick on Monday as investors prepared for a shortened trading week leading up to the Thanksgiving holiday. The S&P 500 rose by 0.9%, building on its strong performance from Friday, while the Dow Jones Industrial Average saw an increase of 72 points, or 0.2%. The more tech-focused Nasdaq composite was up an impressive 1.7%.
This rise in stock prices was fueled by growing optimism surrounding a potential interest rate cut by the Federal Reserve at its upcoming December meeting. Such a move could bolster the economy and enhance investment prices, giving traders reason to be hopeful. Additionally, stocks linked to the artificial intelligence sector showcased strong performances, with Alphabet gaining 5.6% amid favorable reviews for its latest Gemini AI model. Conversely, Nvidia saw a minor decline of 0.3% after fluctuating during the session.
Despite the promising start to the day, market volatility remains a concern. Investors have experienced sharp price swings in recent weeks, with market conditions affected by uncertainty over the Fed’s interest rate policies and rising fears about a possible bubble in AI investments. Even within the first 15 minutes of trading on Monday, the S&P 500 initially registered a 1% gain but quickly saw that figure halved.
This period is proving to be a significant test for investors, reminiscent of the turmoil following President Donald Trump’s “Liberation Day” tariffs in April. However, even amidst these fluctuations, the S&P 500 is still within 3.3% of its record high set last month.
Market watchers are bracing for several crucial data releases this week, particularly the government’s report on wholesale inflation for September, which is set to be released on Tuesday. Economists predict a 2.6% year-over-year rise in wholesale prices, matching the inflation rate from August. A higher-than-expected figure could hinder the Fed’s plans to lower interest rates for the third time this year, as it may signal worsening inflation, which the Federal Reserve aims to keep below its target of 2%.
Despite inflation concerns, traders are currently betting on a nearly 79% chance that the Fed will opt for a rate cut next month. This is an increase from 71% on Friday and signifies a shift in sentiment from just a week ago, when the odds were less than even.
As Thanksgiving approaches, U.S. markets will be closed on Thursday, leading into the busy shopping days of Black Friday and Cyber Monday.
In corporate news, shares of Novo Nordisk dropped 8.3% after the company reported disappointing results regarding its Alzheimer’s drug, which failed to significantly slow disease progression in clinical trials.
In cryptocurrency, Bitcoin exhibited volatility, trading near $86,000 after experiencing a week of fluctuations between $82,000 and $94,000, down from a peak of near $125,000 last month.
Internationally, stock indexes saw mixed performance across Europe and Asia. Hong Kong’s Hang Seng index saw a notable increase of 2%, largely driven by a 4.7% rise in Alibaba shares, which reported robust demand for its updated Qwen AI application. Alibaba is also scheduled to release its earnings report on Tuesday.
In the bond market, Treasury yields remained relatively stable, with the yield on the 10-year Treasury easing to 4.04% from 4.06% late Friday, indicating stable investor sentiment in government bonds amidst the broader market fluctuations.
