Wall Street Extends Rally Ahead of Thanksgiving Break as Fed Rate Cut Hopes Fuel Gains
- Why Is Wall Street Rallying Before Thanksgiving?
- What Are the Key Factors Driving Market Sentiment?
- How Are Major Indices Performing?
- What's the Outlook for Fed Policy?
- Which Stocks Are Moving Markets Today?
- What Are the Key Geopolitical Developments?
- How Are Commodities and Crypto Performing?
- What's the Market Outlook Post-Thanksgiving?
- Frequently Asked Questions
U.S. markets continued their upward momentum Wednesday, with the S&P 500 gaining 0.49% to 6,799 points, the Nasdaq rising 0.55% to 23,152 points, and the Dow Jones advancing 0.50% to 47,348 points. The recent rebound has been primarily driven by monetary policy expectations and trade optimism. Markets will be closed Thursday for Thanksgiving and reopen Friday for a shortened session. According to CME FedWatch, there's now an 82% probability of a quarter-point rate cut in December following dovish comments from New York Fed President John Williams. Meanwhile, Fed Governor Christopher Waller maintains his stance supporting a December rate cut, citing moderated inflation concerns. In corporate news, Dell Technologies surged 4.5% after reporting record AI server revenue, while HP Inc. fell 2.8% despite beating profit expectations. Geopolitical developments include progress in U.S.-Ukraine peace plan discussions and continued trade negotiations between the U.S. and EU.
Why Is Wall Street Rallying Before Thanksgiving?
The current market rally stems from shifting monetary policy expectations, with traders now pricing in an 82% chance of a quarter-point rate cut at the December Fed meeting. This sentiment shift followed comments from New York Fed President John Williams suggesting potential easing. "We're seeing what I call a 'dovish detonation' in markets," notes BTCC market analyst David Chen. "After months of hawkish rhetoric, even subtle hints of policy easing are enough to send stocks higher." The rally has been particularly strong in tech stocks, with the Nasdaq Composite gaining for five consecutive sessions.
What Are the Key Factors Driving Market Sentiment?
Several factors are contributing to the bullish sentiment:
- Monetary Policy Expectations: The CME FedWatch Tool shows markets now expect an 82% probability of a rate cut in December, up from just 18% last week.
- Inflation Data: Fed Governor Christopher Waller noted inflation has moderated to 2.4-2.5% excluding tariffs, reducing pressure for tight policy.
- Labor Market: Recent jobless claims came in at 216,000, better than the 230,000 consensus, suggesting economic resilience.
- Corporate Earnings: Dell Technologies reported record AI server revenue, while Autodesk beat expectations with strong cloud subscription growth.
How Are Major Indices Performing?
As of Wednesday's close:
| Index | Change | Level |
|---|---|---|
| S&P 500 | +0.49% | 6,799 pts |
| Nasdaq | +0.55% | 23,152 pts |
| Dow Jones | +0.50% | 47,348 pts |
The S&P 500 has now recovered nearly all its October losses, while the Nasdaq has gained over 8% this month alone. Trading volumes remain elevated ahead of the Thanksgiving holiday, with many investors positioning for year-end portfolio adjustments.
What's the Outlook for Fed Policy?
The Fed leadership situation adds an interesting dynamic. With Chair Powell's term expiring in May, speculation grows about potential successors. Current frontrunner Kevin Hassett, Chairman of the National Economic Council, has criticized the Fed's handling of pandemic-era inflation and advocates aligning rates more closely with economic conditions. Meanwhile, Governor Christopher Waller continues pushing for December easing, arguing that "the labor market shows little evolution since our last meeting, and inflation isn't currently a major problem."
Which Stocks Are Moving Markets Today?
Notable movers include:
- Dell Technologies (+4.5%): Reported record AI server revenue of $12.3 billion in orders, with full-year sales guidance of $111.2-112.2 billion.
- HP Inc (-2.8%): Announced plans to cut 4,000-6,000 jobs despite beating profit expectations.
- Autodesk (+2.3%): Beat estimates with 18% revenue growth driven by cloud subscriptions.
- Deere (-5.4%): Fell on disappointing guidance despite Q4 revenue growth of 11%.
What Are the Key Geopolitical Developments?
On the trade front:
- The U.S. and EU continue negotiations on steel and aluminum tariffs, with Commerce Secretary Howard Lutnick stating "we're in discussions with them" about digital regulation changes.
- President Trump and Chinese leader Xi Jinping held their first phone call since last month's trade truce, discussing agricultural purchases and Taiwan.
- The U.S. and Ukraine are revising a peace plan that previously drew criticism for perceived concessions to Russia.
How Are Commodities and Crypto Performing?
Key moves:
- WTI crude: -0.1% at $58/barrel
- Gold: +0.7% at $4,161/ounce
- Bitcoin: Testing $87,000 resistance level
What's the Market Outlook Post-Thanksgiving?
Historically, the Thanksgiving week tends to be bullish for stocks, with the so-called "Santa Claus rally" often beginning around this time. However, traders will be watching several factors:
- Friday's shortened session trading volumes
- Progress on U.S.-China trade talks
- Further Fed commentary ahead of the December meeting
- November jobs data due next week
Frequently Asked Questions
Why are markets closed on Thanksgiving?
U.S. financial markets traditionally close on Thanksgiving Day as a national holiday, reopening for a shortened session on Friday. This allows market participants time with family while maintaining some trading availability.
What time do markets close on Friday after Thanksgiving?
Markets will close early at 1:00 PM Eastern Time (19:00 French time) on Friday, November 28th, instead of the usual 4:00 PM close.
How reliable is the CME FedWatch tool for predicting rate changes?
While not perfect, the CME FedWatch tool provides real-time probabilities based on fed funds futures pricing and has historically been reasonably accurate in reflecting market expectations for Fed actions.
What's driving Dell Technologies' strong performance?
Dell's surge stems from record AI server demand, with $12.3 billion in orders and full-year sales guidance of $111.2-112.2 billion, representing 17% growth at the midpoint.
How significant is the potential Fed leadership change?
While any leadership change at the Fed is important, markets currently appear more focused on near-term policy decisions than potential 2025 personnel changes. Kevin Hassett's views align closely with President Trump's preference for lower rates.
