Fed rate cut expectations and tech strength drive four-day winning streak
The New York stock market heated up a day ahead of the Thanksgiving holiday. Expectations that the Federal Reserve will cut interest rates next month have revived, and major tech stocks, which had faced bubble concerns, showed renewed strength, leading the three major indices to close higher for four consecutive trading days.
On the 26th (local time), the Dow Jones 30 Industrial Average on the New York Stock Exchange (NYSE) rose by 405 points (0.9%) from the previous day. The S&P 500 index, which tracks large-cap stocks, also rose 0.9%, maintaining a solid upward trend. The tech-heavy Nasdaq Composite Index climbed 1.0%, recording the highest gain among the three major indices.
The biggest positive factor was interest rates. Bloomberg analyzed on the day, “Expectations that the Fed will cut rates have reignited investor optimism.” Typically, expectations of lower rates benefit growth and tech stocks, which require discounting future value to the present.
Technical indicators reflecting investor sentiment also positively influenced market psychology. The S&P 500 index regained its 50-day moving average, a key technical support level. This signals that short-term price movements are stronger than long-term trends. It is interpreted as providing psychological reassurance to market participants that “now is a good time to buy.”
The VIX volatility index, also known as the “fear index,” sharply contracted. The VIX fell over 35% over the past four days, marking the steepest decline since mid-April. This is evidence that a sense of relief — “uncertainty is clearing” — is spreading on Wall Street.
In individual stocks, big tech companies related to artificial intelligence (AI) advanced. Oracle, in particular, surged over 4% as Deutsche Bank maintained a positive investment rating.
NVIDIA, which had stalled due to concerns over intensifying AI chip competition, also shook off worries and rebounded. NVIDIA’s rise led related hardware companies like Dell and Hewlett Packard Enterprise to climb alongside, boosting the Nasdaq index. The Magnificent 7 (M7) major tech stocks appear to be regaining market leadership.
CNBC, citing experts, stated, “Historically, the stock market tends to show strength during the Thanksgiving week,” adding, “Everyone’s feeling good ahead of the holiday, and the market mood is very positive.”
Economic indicators also supported the market. The weekly jobless claims report released on the day defied market expectations of a slight increase and instead showed a modest decrease from the previous week. This indicates that the U.S. labor market remains robust. Bloomberg interpreted this as a “Goldilocks” indicator — not too hot or cold — easing recession concerns while not undermining the Fed’s rationale for rate cuts.
The bond market also regained stability. The benchmark 10-year U.S. Treasury yield closed with little change around the 4.00% level. Germany’s 10-year government bond yield stood at 2.67%, while the UK’s 10-year yield fell by 7 basis points (1 basis point = 0.01 percentage point) to 4.42%, showing overall stability in global bond markets.
The dollar’s value declined. The Bloomberg Dollar Spot Index fell 0.3%. A weaker dollar is seen as a positive for the New York stock market, as it can enhance the export competitiveness of U.S. companies and improve earnings. The yen’s exchange rate was 156.49 yen per dollar, with the yen’s value falling 0.3% (exchange rate increase), while the euro and pound sterling showed strength.
The cryptocurrency market also posted overall gains. Bitcoin rose 3.2% from the previous trading day to $89,826.92, nearing the $90,000 threshold. Ethereum also climbed 3.3% to $3,025.99, proving that risk-on sentiment has spread to the crypto market.
International oil prices rose as well. West Texas Intermediate (WTI) crude oil closed at $58.62 per barrel, up 1.2%. Gold prices also increased 0.9% to $4,167.78 per ounce.
The New York stock market will be closed on the 27th (local time) for Thanksgiving. Trading will end early at 1 p.m. on the 28th. Experts predict that Black Friday sales performance, a key indicator of consumer sentiment during the holiday season, will set the direction for the year-end market.
