Key Takeaways:
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• Major indexes logged a fourth straight day of gains; Nasdaq on pace for best Thanksgiving week since 2008.
• Investors are increasingly pricing in a December Fed rate cut — expectations now above 80%.
• AI sentiment stabilizes, boosting Microsoft, CoreWeave and Dell even as Nvidia remains off peak levels.
• Market breadth strong — all but two S&P 500 sectors advanced; sentiment improves despite mixed labor data.
What Happened?
U.S. equities continued their upward trend with a fourth straight session of gains, driven by optimism over potential Federal Reserve rate cuts and revived confidence in AI-linked stocks. The Nasdaq climbed 0.8%, putting it on track for its strongest Thanksgiving performance since 2008, while the S&P 500 and Dow both rose 0.7%. Expectations for a December rate cut surged to more than 80% — up from below 50% just over a week ago — as investors interpreted labor data as a sign of cooling but stable economic conditions.
Why It Matters?
A renewed risk appetite is emerging as concerns of an AI bubble ease and rate-cut probabilities strengthen. Broad sector participation signals healthier market depth beyond mega-cap tech, easing fears of narrow leadership. Investors are reallocating within the AI trade — Nvidia remains pressured while Alphabet and others gain traction — reflecting more selective positioning rather than indiscriminate momentum chasing. Improving sentiment ahead of year-end could fuel further rotation, supporting valuations across growth and cyclical segments.
What’s Next?
The shortened U.S. trading week could produce lighter volumes but heightened directional reactions. Markets may hinge on confirming economic releases delayed by the government shutdown — particularly employment and inflation indicators that could validate or weaken the rate-cut narrative. If momentum holds through Thanksgiving, a year-end rally becomes more plausible, though stock picking within AI remains critical as leadership shifts.
