S&P 500 futures opened notably higher today by roughly 0.5 percent after four consecutive weeks of declines
The return of optimism around a potential December rate cut might power the positive tone at the U.S. stock market opening today.
Investors appear to be reassessing the severity of last week’s AI-driven selloff and shifting back toward risk assets as policy expectations soften. The diplomatic progress in efforts to end the war in Ukraine adds an additional layer of relief, offering a geopolitical tailwind that markets had not priced in during recent weeks.
This shift comes after global equities closed last Friday on a weak footing. Markets retreated on November 21 following a sharp reversal in the U.S. tech sector, triggered by a steep drop in Nvidia’s shares.
The selloff reignited fears of an overheating artificial-intelligence trade and prompted a broad liquidation in semiconductor stocks across Asia and Europe, with the Kospi and TAIEX absorbing the heaviest pressure back then.
According to The Wall Street Journal, investor sentiment toward AI is transitioning from unbounded enthusiasm to a more restrained stance. Concerns are escalating over the sector’s reliance on cash-burning business models that lack visible paths to profitability. The WSJ notes that markets are becoming less tolerant of “fake it till you make it” strategies, where firms promise future breakthroughs while operating at steep losses. The muted reaction to Nvidia’s strong earnings and its multibillion-dollar agreement with Anthropic illustrates that investors now demand clearer evidence of monetization rather than visionary narratives alone.
This complex backdrop is intersecting with increased fragmentation inside the Federal Reserve. Boston Fed President Susan Collins said she sees no urgency for a December cut, citing a still-firm economy and financial conditions that continue to act as a tailwind.
In contrast, New York Fed President John Williams signaled that a near-term reduction could be appropriate, placing him closer to policymakers who worry about a softening labor market. Other regional Fed presidents remain cautious, warning that easing prematurely risks reigniting inflationary pressure. Their divergence underscores the challenge Chair Powell faces in reaching a unified stance for the December meeting.
Yet despite the internal debate, market pricing shows a clear tilt toward policy easing. The CME FedWatch Tool assigns a probability of 71 percent to a 25-basis-point rate cut in December, up sharply from around 40 percent a week earlier. The adjustment has pushed the 10-year Treasury yield lower at the open after two sessions of notable declines, offering additional support to equity valuations that had been strained during the recent correction.
A meaningful geopolitical shift adds further dimension to the improving sentiment. The White House announced progress toward refining a peace framework between Ukraine and Russia, following negotiations in Geneva. According to Secretary of State Marco Rubio, the updated structure strengthens Ukrainian sovereignty relative to earlier drafts and keeps open the possibility of future NATO membership. While the final terms remain unresolved and Russia has yet to offer acceptance, the recalibrated proposal reduces the risk premium that has been embedded in global markets throughout the conflict.
