US: Wall Street extends rally on growing bets for December Fed rate cut

[NEW YORK] Wall Street gained ground on Wednesday as revived tech strength and the growing probability of a December interest rate cut from the US Federal Reserve put investors in a buying mood the day before the Thanksgiving holiday.

All three major US stock indexes were on course to notch their fourth consecutive daily gains, as investors looked past the worries over inflated tech valuations that dragged all three indexes to losses last week.

Those fears ebbed in the aftermath of artificial intelligence doyen Nvidia’s upbeat quarterly results and forward guidance, and were eased further by AI server maker Dell Technologies’ consensus-beating fourth-quarter revenue forecast.

“Nvidia ... put some of the short-term fears to rest,” said Matthew Keator, managing partner in the Keator Group, a wealth management firm in Lenox, Massachusetts.

“Since then we’ve seen some dovish comments from the Fed, particularly the New York Fed governor, which I think are signaling a potential cut next month, and I think that that’s what’s been driving the markets lately.”

A poll conducted by Reuters showed that, on average, analysts expect the S&P 500 to rise by 12 per cent between now and year-end 2026, powered by a robust economy, continued tech sector strength and an accommodative Fed.

The Fed’s Beige Book, which summarises economic activity conditions by district, appeared to have little to no effect on rate cut expectations.

Financial markets are currently pricing in a likelihood of 84.9 per cent that the central bank will implement a 25-basis-point reduction to its key Fed funds target rate at the conclusion of its December policy meeting, according to CME’s FedWatch tool.

Airlines were sharply higher on what is traditionally the busiest travel day of the year for commercial carriers. The S&P 1500 Airlines index jumped 3.4 per cent.

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Air traffic is often viewed as a barometer of consumer health, which bodes well heading into the holiday shopping season, which kicks off on Thanksgiving and is followed by Black Friday and Cyber Monday.

The period is crucial for US retailers as they court shoppers and navigate tariff-squeezed profit margins and a wave of corporate layoffs.

Even so, while the National Retail Federation forecasts 2025 holiday sales to surpass US$1 trillion for the first time, forecasts from discount retailers such as Walmart and Target have been mixed.

Economic data showed consensus-topping core capital goods orders in September, and while the report from the Commerce Department is stale due to government shutdown delays, it suggests corporate expenditures are more robust than economists predicted.

On the other hand, while initial claims for unemployment insurance landed below consensus, ongoing claims remain on an upward trend, supporting recent survey data showing consumers’ assessment of the labour market is deteriorating.

The Dow Jones Industrial Average rose 388.45 points, or 0.82 per cent, to 47,501.03, the S&P 500 gained 53.34 points, or 0.79 per cent, to 6,819.20 and the Nasdaq Composite gained 198.98 points, or 0.86 per cent, to 23,224.17.

Among the 11 major sectors in the S&P 500, tech topped percentage gainers, while communication services suffered the biggest drop. Dell Technologies jumped 5.9 per cent in the wake of its better-than-expected earnings and upbeat forecast

Human resources software firm Workday slid 9.3% after the company reported third-quarter subscription revenue in line with estimates. Deere’s weaker-than-expected annual profit forecast, weighed down by tariff effects, sent the heavy machinery maker’s shares down 4.7%.

Advancing issues outnumbered decliners by a 4.11-to-1 ratio on the NYSE. There were 225 new highs and 20 new lows on the NYSE.

On the Nasdaq, 3,165 stocks rose and 1,417 fell as advancing issues outnumbered decliners by a 2.23-to-1 ratio.

The S&P 500 posted 31 new 52-week highs and no new lows while the Nasdaq Composite recorded 118 new highs and 44 new lows. REUTERS