The U.S. stock market continued to maintain strong momentum as all three major indices rose in the latest session. The Nasdaq led with a gain of more than 2.69%, reflecting the impressive comeback of the technology sector and stocks associated with the AI narrative. The S&P 500 gained 1.55%, while the Dow Jones rose slightly by 0.44%, indicating that capital is favoring high growth stocks as financial conditions become less restrictive.
The highlight of the rally was the breakout of technology companies. Google surged 6.31% as the market remained excited about the Gemini AI platform, Nvidia and Apple held steady in the green, while Tesla jumped more than 6.82% after several days of sharp declines. The return of Big Tech helped restore market confidence following the previous sharp correction when concerns about an AI bubble had pushed the S&P 500 down nearly 2%.
The current macro environment is creating more favorable conditions for the stock market. The U.S. 10-year Treasury yield fell to around 4.06%, significantly lower than the near 4.8% peak earlier this year. The USD Index also edged down to around 99.7 points. The simultaneous decline in yields and the U.S. dollar helps ease funding-cost pressures and improves valuations for interest-rate-sensitive stocks, especially technology. This is one of the reasons why Big Tech reacts very sensitively and strongly to changes in market interest-rate expectations.
Another core factor supporting the rally in U.S. equities is the expectation of a more dovish stance from the Federal Reserve. Recent signals indicate that the Fed may lean toward cutting interest rates earlier than expected if the disinflation trend continues. Comments from Fed Governor Christopher Waller, stating that a rate cut in December “is appropriate,” gave a strong boost to market expectations. According to the CME FedWatch Tool, the probability of a 25-basis-point cut in December has risen to over 80%, significantly higher than the nearly 40% level just one week earlier.
Market flows also showed notable positive signs. Not only did Big Tech rise sharply, but mid-cap and small-cap stocks also recorded moderate gains, showing that the breadth of the recovery is expanding. However, the high concentration of profits in the technology sector makes the market more sensitive to negative news related to AI valuations or earnings reports from major companies.
Although the short-term outlook is positive, the market still faces several factors that may trigger volatility this week. Most notable are the Producer Price Index (PPI) report, consumer data, and a series of speeches from Fed officials. These events are considered crucial signals for the Fed’s final decision in the December meeting.
Overall, the U.S. stock market’s recovery momentum may continue to expand as it is supported by a combination of interest-rate cut expectations, lower Treasury yields, and the strong comeback of the technology sector. However, high valuations and the heavy concentration of profits in a single group of stocks remain factors that make this trend vulnerable to any negative signals from economic data or the Fed.
