The stock market staged a powerful comeback during the shortened holiday week, as expectations of a Federal Reserve rate cut at the Dec. 10 meeting soared, fueling broad-based gains across sectors.
The rally was ignited by a notable shift in tone from Federal Reserve officials. Several members openly signaled support for a 25-basis-point rate cut, flipping market sentiment that had, until last week, priced the odds of such a move at 50% or less. According to markets, those chances have now surged to nearly 90%.
Notably, the hawkish tone of Fed Chair Jerome Powell in October, when he said a December cut was "far from" guaranteed, appeared to be losing weight as his term draws to a close in May 2026.
Meanwhile, political chatter around Powell's successor intensified. Kevin Hassett, former White House economist and current head of the National Economic Council, was now viewed as the leading contender. Odds of a Trump nomination for Hassett jumped to 57%, with analysts already having factored in a more dovish Fed pivot in 2026.
On Wall Street, Alphabet Inc. (NASDAQ:GOOGL) was the week's standout winner. The Google parent company surged past Microsoft Corp. (NYSE:MSFT) to become the world's third-largest publicly traded company, hitting a $4 trillion market cap. The jump came amid fresh investor optimism over Alphabet's progress in artificial intelligence, with multiple new AI features and enterprise tools announced in recent weeks.
Nvidia Corp. (NASDAQ:NVDA) didn't share the same momentum, closing out November as the worst month since March.
Reports revealed Meta Platforms Inc. (NASDAQ:META) is considering a multibillion-dollar investment in Alphabet's custom AI chips, which fueled concerns about Nvidia's future dominance in the space.
AI enthusiasm is now rippling beyond the usual suspects. The health care sector – as tracked by the Health Care Select Sector SPDR Fund (NYSE:XLV) – which is using AI to help speed up the R&D cycle, posted its strongest month since the COVID-19 pandemic, with several biotech names that notched double-digit weekly gains, suggesting fresh risk appetite in previously beaten-down corners of the market.
Meanwhile, the Detroit auto sector quietly continued its bullish streak. General Motors Co. (NYSE:GM) hit a new all-time high at $72 on Wednesday, closing its fifth straight month in the green. The stock was now up 37% year-to-date, cementing a turnaround narrative that has defied broader concerns about U.S. manufacturing.
Read Next:
Photo: Shutterstock
