US stocks surged to record highs on Monday, with the Nasdaq and S&P 500 hitting new all-time peaks, fueled by strong gains in technology stocks. The rally was bolstered by comments from key Federal Reserve members hinting at a possible interest rate cut at the Fed’s upcoming meeting in December.
Fed President Raphael Bostic, speaking to reporters, said he was still weighing the decision on whether to cut rates at the Federal Open Market Committee (FOMC) meeting scheduled for December 18. However, Bostic emphasized that he was “keeping his options open” and acknowledged that the risks to achieving the Fed’s dual mandate of maximum employment and price stability have balanced out.
“The risks have shifted such that they are now roughly in balance,” Bostic wrote in an essay released Monday. “As a result, it’s time to consider a policy stance that neither stimulates nor restrains economic activity.”
Meanwhile, Fed Governor Christopher Waller signaled a preference for a rate cut, citing the positive economic data and forecasts indicating that inflation is on track to fall toward the Fed’s 2% target over the medium term. “Given the current data and outlook, I am leaning toward supporting a rate cut at our December meeting,” Waller said during a forum in Washington.
Market expectations for a December rate cut have grown significantly, with the CME FedWatch Tool now indicating a 77% probability of a cut, up from 65% earlier in the day. The Fed’s actions could have major implications for both Wall Street and the broader economy, potentially providing further momentum to the ongoing market rally.
With the third-quarter earnings season nearly complete, investors are now turning their attention to upcoming economic data, including key reports on the labor market and consumer spending. As the holiday shopping season intensifies, retail sales remain a focal point for market watchers.
On Monday, major US indexes closed as follows:
- S&P 500: 6,047.15, up 0.24%
- Dow Jones Industrial Average: 44,782.00, down 0.29% (-128.65 points)
- Nasdaq Composite: 19,403.95, up 0.97%
Retail activity has been robust, with Black Friday sales showing strong growth. Mastercard Spending Pulse data revealed a 3.4% year-over-year increase in US retail sales, driven primarily by a 14.6% surge in online purchases. In-store sales saw a modest rise of just 0.7%. Michelle Meyer, Chief Economist at Mastercard Economics Institute, noted, “Black Friday was a clear indicator that the holiday season is shaping up positively, with consumers in a strong gift-giving mood.”
Looking ahead, economic data this week will keep investors on edge. Key reports include November auto sales on Tuesday, ADP employment data on Wednesday, and the crucial November jobs report on Friday. The nonfarm payrolls data is expected to show a significant rebound in hiring, with economists forecasting an increase of 214,000 jobs, compared to a disappointing 12,000 in October.
As the market heads into the final month of the year, all eyes will be on the Fed’s next move and how it will influence both market sentiment and the broader economy.
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