Tuesday saw the Dow maintain its winning streak, rising more than 650 points as traders became increasingly confident that the Fed would lower interest rates in December. The index closed at 47,112.45 after rising 664 points, or 1.43%. The Nasdaq increased 0.67% to close at 23,025.59, while the S&P 500 increased 0.91% to 6,765.88.
Things didn’t start out so rosy. All three indexes dropped early in the session—the S&P lost as much as 0.7%, and the Nasdaq slid over 1%. But as the day went on, optimism took over. By late afternoon, markets were betting there’s an 80% chance the Fed will lower rates by a quarter point next month, according to CME’s FedWatch.
Fed News Gave Traders Hope
Speculation about who’ll lead the Fed next gave traders another reason to cheer. Reports say White House economic adviser Kevin Hassett is now the frontrunner to replace Jerome Powell. Wall Street sees Hassett as someone who’d back Trump’s push for lower rates. Scott Bessent, the Treasury Secretary, ignited the flames by stating that Trump will “very likely” reveal his choice before Christmas.
Last week, New York Fed President John Williams added fuel to the fire, hinting that policymakers have room to cut rates soon. That sent markets even higher.
AI Trade Stays in Focus as Alphabet Shines
In the tech world, Alphabet made headlines with a 1.5% jump, setting new records after news broke that Meta could pour billions into Alphabet’s AI chips. That’s keeping the AI trade in the spotlight. Still, not everyone’s celebrating—Nvidia fell 2% as some investors worry about rising competition.
Even after this rally, the big indexes are still on track to end the month in the red, with investors still questioning whether tech stocks are just too expensive.
