On Monday, stock markets experienced a notable rally as investors reacted positively to comments from key Federal Reserve officials, while technology stocks made a significant recovery from previous declines. The S&P 500 concluded the day with a gain of 1.6%, and the Nasdaq Composite rose by an impressive 2.7%, marking its strongest performance since May.
The upward momentum was fueled by remarks from two prominent Fed officials who expressed support for potential interest rate cuts during the central bank’s upcoming meetings set for December 9 and 10. Mary Daly, president of the Federal Reserve Bank of San Francisco, highlighted the “vulnerable” state of the labor market, indicating her backing for a reduction in rates. Although Daly is not a voting member of the Fed’s Open Market Committee, her stance usually aligns closely with that of Fed Chair Jerome Powell.
Federal Reserve Governor Christopher Waller, who does possess a permanent vote on interest rate decisions, also shared his concerns regarding the labor market during an appearance on Fox Business Network. Waller has been an advocate for interest rate cuts for several months and reiterated his position, focusing on the dual mandate of the Fed.
The sentiment shifted dramatically last week after New York Fed President John Williams indicated his support for a rate cut, significantly increasing market expectations. By Monday afternoon, the probability of a rate cut had surged to over 85%, according to the CME Group’s FedWatch tool, which monitors futures market bets on interest rates.
Market participants closely monitor Fed officials’ comments as lower interest rates generally lead to reduced borrowing costs, enhancing corporate profitability and, in turn, providing a boost to stock market performance.
Additionally, a robust rebound in major technology stocks further propelled market indexes. Shares of Apple and Nvidia rose approximately 2%, Amazon’s stock climbed 2.5%, and Alphabet saw a remarkable surge of 6.3%. This surge followed the recent announcement from Alphabet’s Google division about a new AI model named Gemini 3, which has generated excitement in the tech sector.
Chipmakers focusing on AI technologies also experienced significant gains, with Broadcom soaring over 11%, Micron rising by 8%, and AMD increasing by 5.5%. The enthusiasm around AI developments continues to drive investor interest and supports the overall market rally. The combination of favorable Fed commentary and advancing tech stocks offers a promising outlook for future market movements.