The U.S. stock market experienced a notable rise on November 21, 2023, with the S&P 500 increasing by 1%. This uptick follows a substantial gain from the previous Friday, as investors expressed optimism regarding potential interest rate cuts from the Federal Reserve during its upcoming meeting in December. By 9:35 a.m. Eastern time, the Dow Jones Industrial Average had risen by 144 points, or 0.3%, while the Nasdaq Composite surged 1.7%.
Investor confidence has been bolstered by recent developments surrounding artificial intelligence, particularly the performance of Alphabet. The company’s latest AI model, Gemini, has garnered significant praise, contributing to a remarkable 5.2% increase in its stock price. This surge positioned Alphabet as a primary driver behind the S&P 500’s ascent. Additionally, tech giant Nvidia saw a modest gain of 0.7%, reflecting the ongoing enthusiasm in the AI sector.
Despite the positive momentum, market volatility remains a concern. Recent weeks have demonstrated sharp fluctuations in stock prices, influenced by uncertainty regarding the Federal Reserve’s approach to interest rates and fears of an overheated AI market potentially creating a bubble. This environment poses a considerable challenge for investors, reminiscent of the turbulence experienced during an April sell-off triggered by unexpected trade tariffs.
Looking ahead, several key economic indicators could influence market stability. Notably, the U.S. government is set to release data on wholesale inflation for September, which is anticipated to show a 2.6% increase compared to the previous year, mirroring August’s rate. A higher-than-expected inflation figure could deter the Federal Reserve from implementing a third interest rate cut this year, as lower rates could exacerbate inflation concerns. Some Fed officials have already voiced opposition to further cuts due to persistent inflation levels exceeding their 2% target.
Despite these uncertainties, traders are increasingly optimistic, currently assigning a nearly 79% probability to a rate cut next month, a notable rise from 71% just days earlier. With U.S. markets closing for the Thanksgiving holiday on Thursday, followed by the consumer frenzy of Black Friday and Cyber Monday, market participants remain attentive to shifting economic signals.
In other market developments, shares of Danish pharmaceutical company Novo Nordisk fell sharply, down 7.9%, after announcing that its Alzheimer’s drug did not demonstrate efficacy in slowing disease progression in trials. Meanwhile, the cryptocurrency market remains volatile, with Bitcoin trading around $86,000 after fluctuating between $82,000 and $94,000 in recent days; this follows a peak of nearly $125,000 last month.
Internationally, stock indexes displayed mixed performance across Europe and Asia. The Hang Seng Index in Hong Kong notably surged by 2%, buoyed by a 4.7% increase in shares of Alibaba, which reported strong demand for its updated Qwen AI application. Alibaba is expected to announce its earnings on Tuesday, further influencing market sentiment.
In the bond market, Treasury yields remained relatively stable, with the yield on the 10-year Treasury easing slightly to 4.04% from 4.06% late Friday. As investors navigate these developments, the coming days will be critical in shaping market dynamics in the lead-up to the holiday season.
