Yesterday, stock indices closed with gains. The S&P 500 rose by 0.69%, while the Nasdaq 100 increased by 0.82%. The Dow Jones Industrial Average jumped by 0.67%.
Global stock indices are close to recovering November losses, as rising expectations for a Federal Reserve rate cut have revived markets after a sell-off caused by concerns over inflated AI valuations.
Support for the markets also came from positive macroeconomic data regarding the US labor market and durable goods orders, indicating the resilience of the American economy despite the challenges it faces. Particularly, the technology sector has once again become the growth engine. The potential of artificial intelligence and the high valuations of many companies in this field are positively impacting market sentiment.
The MSCI All Country World Index rose for the fifth consecutive session on Thursday, reducing its November decline to just 0.5%. Asian indices, which also demonstrated similar gains, rose by 0.5%, cutting their losses since early November to 2%. The four-day rally in Treasury bonds paused on Wednesday, with the yield on 10-year bonds at 4%.
Today, American stock markets are closed for the Thanksgiving holiday, so trading will be less intense in the afternoon.
The index growth occurred amid expectations of eased Fed policy, with money markets now pricing in approximately an 80% probability of a quarter-point rate cut next month and three additional cuts by the end of 2026. A week ago, traders were only expecting three cuts for next year.
"Certainly it looks like the Fed rate-cut optimism has offset AI bubble," Saxo Markets said. "And the weaker dollar adds an additional leg of support."
Meanwhile, the release of the US Federal Reserve's Beige Book indicated a slight decline in employment levels, while prices increased moderately. Consumer spending continued to shrink, with the exception of high-income consumers. Additionally, the number of initial jobless claims fell slightly, contrary to expectations of moderate growth.
In the commodities market, oil prices dipped slightly as investors continued to closely monitor US efforts to end the conflict in Ukraine.
Regarding the technical picture of the S&P 500, the main task for buyers today will be to overcome the nearest resistance level of $6,819. This would help the index gain ground and pave the way for a potential rally to a new level of $6,837. Another priority for bulls will be to maintain control over the $6,842 mark, which would strengthen buyer positions. In the event of a downturn amid reduced risk appetite, buyers must assert themselves around $6,801. A break below this level would quickly push the trading instrument back to $6,784 and open the path to $6,769.
