The S&P 500 surged on Monday as renewed interest in artificial intelligence stocks helped lift market sentiment. Investors also increased their expectations for a potential Federal Reserve rate cut in December, supporting a broader rebound after recent volatility.
At 11:51 a.m. ET (17:52 GMT), the Dow Jones Industrial Average rose 257 points, or 0.3%. The S&P 500 gained 1.5%, while the NASDAQ Composite advanced 2.6%.
Despite Monday’s gains, U.S. indices remain on track for a weak November. The S&P 500 is set to fall about 3.5% this month, the NASDAQ is down 6.1%, and the Dow has declined 2.8% so far.
Alphabet Leads Tech Recovery as AI Stocks Regain Momentum
Alphabet Class A (NASDAQ: GOOGL) jumped more than 5% as optimism grew around its updated Gemini AI model, unveiled last week. A leaked memo suggested OpenAI CEO Sam Altman acknowledged that Google’s progress could pose “temporary economic challenges” for his company.
Other AI-heavy names, including NVIDIA (NASDAQ: NVDA) and Oracle (NYSE: ORCL), also traded higher.
Rate-Cut Expectations Strengthen
Recent declines in tech shares were fueled by concerns that AI-driven valuations had become overstretched, leading investors to take profits after a multi-year rally.
However, sentiment improved after New York Fed President John Williams openly supported a rate cut in December. His comments contrasted with more cautious messaging from other Fed officials, highlighting growing divisions within the Federal Reserve.
Federal Reserve Governor Christopher Waller echoed this view on Monday, saying he also favors a December rate cut due to limited changes in economic data since the last meeting.
Rate-cut expectations have risen sharply. According to the CME FedWatch Tool, markets now assign roughly a 69% chance of a 25-basis-point cut in December, up from 44% a week earlier.
Investors will be watching a series of long-delayed economic releases this week. Producer inflation, retail sales, and industrial production for September arrive Tuesday, followed by third-quarter GDP on Wednesday. Signs of easing labor or economic conditions could further support the case for lower rates.
However, the Fed is still headed into the December meeting without key November payroll data, which will only be released after the final policy decision of the year.
Agilent Kicks Off Earnings in a Shortened Week
With Thanksgiving limiting activity, only a light schedule of earnings is expected. Agilent Technologies (NYSE: A) will report Monday after the close, with investors looking for updates on demand for its scientific and medical tools after two years of slower orders. Recent signs suggest some resilience in demand.
Elsewhere, Novo Nordisk (NYSE: NVO) shares fell sharply after the company reported disappointing results from its Alzheimer’s drug trials. In contrast, Biogen (NASDAQ: BIIB) rallied as analysts at Jefferies said Novo’s setback may benefit Biogen by reducing competitive pressure and potentially accelerating uptake of its Alzheimer’s treatment, Leqembi.
