US stocks closed higher on Tuesday, extending gains for a third straight session amid a volatile month marked by a recent government shutdown and a tech selloff. The rally was driven by surging expectations for a Federal Reserve rate cut at the December 9-10 FOMC meeting, with probabilities jumping to 81% for a 25-basis-point reduction (up from 42% last week), fueled by cooling inflation data and labor market concerns. Economic reports from September showed softer retail spending and easing producer prices, reinforcing bets on an easier policy stance.
Nvidia dropped sharply (contributing to its worst month since 2022, down ~15% in November), amid competition in AI hardware.
Advancing stocks dominated (e.g., 3,121 risers vs. 1,462 decliners on Nasdaq). The market’s focus remains on Fed signals, with bonds and the dollar stable. Holiday-shortened week ahead, with markets closed Thursday for Thanksgiving.
It feels like the market is buying into a rate cut in December, see ITB nd XHB.
Stocks like RKT, OPEN, and CARR should do well in a lower rate environment, along with IWM/TNA.
META woke up today. I think MSFT./MSFU is next. GOOGL hit more all-time highs. We sold 1/2position in GGLL for an obscene gain.
Tomorrow is Thanksgiving Eve; let’s hope for some more green.