US Stocks Experience Rebound on Hopes of Interest Rate Cut and AI Growth
The US stock market saw a significant rebound on Monday, with major indices extending their gains from the previous week. The rally was fueled by fresh hopes of an interest rate cut by the Federal Reserve, which boosted investor sentiment. The technology sector led the charge, with tech giants such as Google parent Alphabet, Apple, and Tesla experiencing substantial gains. Alphabet’s latest artificial intelligence offering received strong reviews, contributing to the company’s 6.3% surge.
The Nasdaq Composite index rose 2.7% on Monday, while the Dow Jones Industrial Average and S&P 500 index also saw gains of 0.4% and 1.6%, respectively. The rebound is attributed to the market’s reevaluation of the likelihood of another interest rate cut in December, following comments from Federal Reserve officials. New York Fed President John Williams and Federal Reserve Governor Christopher Waller have signaled that the central bank may cut interest rates next month, citing a weak labor market.
Major European markets were more cautious, with the Frankfurt stock exchange closing 0.6% higher, while London and Paris ended the day narrowly negative. Asian markets, however, were more upbeat, with Hong Kong’s Hang Seng Index rising 2.0% and Tokyo’s Nikkei 225 index closed for a public holiday.
The recent market volatility has been attributed to concerns over a potential AI tech bubble, with investors growing increasingly fearful that the vast sums invested in tech may not yield profits as quickly as expected. However, the latest comments from central bankers have alleviated some of these concerns, boosting the odds of another interest rate cut.
The focus is now on the release of the US producer price index, a key data point that will inform the Federal Reserve’s decision on interest rates. Trading volumes are expected to be lighter than usual due to the upcoming Thanksgiving holiday. The market will be closed on Thursday and will have a half session on Friday.
Key figures at the close of trading on Monday included the Dow Jones Industrial Average at 46,448.27, the S&P 500 index at 6,705.12, and the Nasdaq Composite index at 22,872.01. The euro and pound sterling rose against the US dollar, while Brent crude oil and West Texas Intermediate crude oil prices also saw gains.
The US stock market has experienced significant growth in 2025, driven by bullish sentiment around AI and supported by easing Fed policy. However, recent weeks have seen increased volatility, with investors weighing the potential risks and rewards of investing in tech. As the market continues to navigate these uncertainties, all eyes will be on the Federal Reserve’s decision on interest rates and the potential impact on the global economy.