Tech Stocks Lead as Rate-Cut Bets Keep Rally Alive: Markets Wrap
(Bloomberg) — Tech stocks led the climb in US equities as rising expectations for interest-rate cuts helped carry traders’ newfound optimism into the Thanksgiving break. The dollar slumped.
The S&P 500 rose 0.7% Wednesday, extending an advance into a fourth session after reclaiming its 50-day moving average, a key technical support. Volume on the equity benchmark was around 11% lighter than 30-day average for the time of day. The Nasdaq 100 ended the session up 0.9% after Nvidia Corp. bounced back from competitive fears over its AI processors.
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Volatility took a breather with the VIX dropping around 35% over a four-day span, the steepest pullback in Wall Street’s fear gauge since mid April.
Treasuries softened after inital jobless claims for the week of Nov. 22 fell slightly, defying expectations for a modest increase. The yield on 10-year notes steadied around 3.99%. The dollar slid 0.3%.
“Overall it was a stronger-than-expected round of 8:30am data that has reinforced the notion that there are crosscurrents and mixed performance in the real economy,” according to Ian Lyngen at BMO Capital Markets. “That being said, there is nothing within the reports that will derail the FOMC from cutting by 25 basis points on Dec. 10.”
Equities are regaining momentum after early-November jitters over stretched technology valuations prompted a strong pullback. Sentiment has since improved as dovish remarks by Federal Reserve officials revived bets on a December rate cut.
Those expectations strengthened after it emerged that White House National Economic Council Director Kevin Hassett is the leading contender for the next Fed chair — a choice investors see aligning with President Donald Trump’s push for lower rates.
The release of the US central bank’s Beige Book did little to change the narrative. Employment declined slightly and prices rose moderately, according to the survey of regional business contacts released Wednesday.
Money markets were pricing in a roughly 80% chance of a Fed quarter-point cut next month and favor three more by end-2026. A week ago, traders expected only three cuts in total.
What Bloomberg strategists say…
The latest Beige Book depicts an economy essentially treading water. For markets, the takeaway is straightforward — nothing here challenges expectations for a December rate cut. With the shutdown having robbed policymakers of hard data, this edition carries extra weight: officials insisted they could stay plugged in through district anecdotes, and this report offers the clearest window into that data-void economy. The apparent fragility across districts simply reinforces the recent bond bid.”
— Brendan Fagan, Macro Strategist, Markets Live. For the full analysis, click here.
Meanwhile, bullish stock bets for 2026 are starting to come in. Deutsche Bank AG strategists expect the S&P 500 to climb to 8,000 by the end of 2026, implying an 18% rally and supported by strong earnings and rising buybacks. Their peers at JPMorgan Chase & Co. see the benchmark reaching 7,500, while Societe Generale SA has set a 7,300 target.
For Valerie Charriere, head of European equities at BNP Paribas Asset Management, the shorter-term outlook remains clouded after the recent volatility.
“I don’t expect the typical Christmas rally to occur,” she said. “There are some cracks in AI valuations, uncertainties on the Fed. So taking into account the strong performance so far this year, I would expect rather a rotation to more underperforming defensive sectors.”
In the UK, Chancellor of the Exchequer Rachel Reeves expanded her fiscal buffer to£22 billion ($29 billion) in her latest budget. She funded the increase with £29.8 billion in new taxes, including levies on gambling and prime real estate.
The pound and gilts gained as she delivered her speech in Parliament. They had earlier swung after a premature release of an Office for Budget Responsibility analysis gave traders plenty to parse.
“This should lower the likelihood that the government will need to return to the tax well again,” wrote Matthew Ryan, head of market strategy at Ebury. That comes “with the caveat that market participants will first need to assess whether or not this fiscal restraint can go hand in hand with robust economic growth.
Corporate News:
New York City Comptroller Brad Lander is urging three of the city’s pension funds to drop BlackRock Inc. because of “inadequate” climate plans, the latest move to penalize investment firms for failing to tackle global warming. Dell Technologies Inc.’s shares gained 5.8% as the firm raised its annual projections for the key artificial intelligence server market. Deere & Co.’s first outlook for the year ahead fell short of expectations as uncertainly continues to surround the timing for a recovery in the US farm economy. Robinhood Markets Inc. and Susquehanna International Group are taking over a regulated exchange that was tied to the now-defunct crypto business FTX. The US government said Tuesday it negotiated a 71% discount off of the list price of Novo Nordisk A/S’s blockbuster drugs Ozempic and Wegovy for patients in Medicare. Some of the main moves in markets:
Stocks
The S&P 500 rose 0.7% as of 4:04 p.m. New York time The Nasdaq 100 rose 0.9% The Dow Jones Industrial Average rose 0.7% The MSCI World Index rose 0.9% Currencies
The Bloomberg Dollar Spot Index fell 0.3% The euro rose 0.2% to $1.1594 The British pound rose 0.5% to $1.3236 The Japanese yen fell 0.3% to 156.46 per dollar Cryptocurrencies
Bitcoin rose 3.5% to $90,019.32 Ether rose 3.2% to $3,025.36 Bonds
The yield on 10-year Treasuries was little changed at 3.99% Germany’s 10-year yield was little changed at 2.67% Britain’s 10-year yield declined seven basis points to 4.42% Commodities
West Texas Intermediate crude rose 1.1% to $58.60 a barrel Spot gold rose 0.8% to $4,163.45 an ounce This story was produced with the assistance of Bloomberg Automation.
–With assistance from Kwaku Gyasi, James Hirai, Neil Campling and Julien Ponthus.
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