(Nov 26): US stocks gained on Tuesday as traders upped bets of an interest-rate cut in December and Alphabet Inc threatened Nvidia Corp’s position at the top of the artificial intelligence (AI) sector.
The S&P 500 Index finished 0.9% higher in New York, extending gains for a third-straight session. The Nasdaq 100 Index closed 0.6% higher, reversing from a drop of as much as 1.3% earlier in the day. The Cboe Volatility Index hovered at around 19.
An equal-weighted version of the S&P 500, which makes little distinction between a behemoth like Amazon.com Inc and relative minnow like Axon Enterprise Inc, rose 1.5%. The small-cap focused Russell 2000 Index gained 2.1%.
The release of long-awaited economic data from September — delayed by the US government shutdown — finally began. Retail sales rose modestly, suggesting consumers have slowed down their shopping following months of robust spending. Wholesale inflation picked up on higher energy and food costs, and there were modest advances in the price of consumer goods.
“Downbeat economic data is delivering gains to stock and bond bulls alike, as weaker-than-expected retail sales and consumer confidence numbers coincide with accelerating job losses and rising odds of a December Fed cut,” said José Torres, a senior economist at Interactive Brokers.
While the data is old, Bellwether Wealth’s Clark Bellin said that those were the only figures the central bank has to base its upcoming decision off of. Swaps data continues to show traders have almost fully priced in a December rate cut from the Federal Reserve.
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“Taking a pause on rate cuts would probably do more damage to sentiment than a cut would help, but Powell doesn’t need to be the Grinch that stole Christmas,” said Brian Jacobsen, the chief economist of Annex Wealth Management.
AI superiority
Alphabet shares jumped 1.5%, moderating earlier gains, after a report that Meta Platforms Inc was in talks to spend billions on Google’s AI chips. Nvidia shares dropped 2.6%, erasing the advance it made in Monday’s tech-fuelled rally.
See also: Tech stocks lead as rate-cut bets keep rally alive
“Nvidia’s dominant position is unlikely to be fundamentally threatened in the short-term, but markets are all about forward expectations, and it certainly seems like Alphabet is poised to snatch market share away from Jensen Huang’s empire,” said Chris Beauchamp, the chief market analyst of IG.
The rally in Alphabet shares is poised to shake up the rankings of the world’s most valuable companies. A potential changing of the guard comes at a time where the AI industry has come under scrutiny, with a perception of stretched valuations causing some volatility.
Miller Tabak & Co’s Matt Maley said there’s “no guarantee” the bullish narrative around the technology will stay as strong as it was from April to October, and views the action in Nvidia as a potential problem.
Nvidia’s “poor action since they reported their earnings is definitely a concern for the bulls given that it is such a highly weighted stock in the major averages and the key tech exchange traded funds”, Maley said.
In terms of notable stock moves, bank stocks climbed after the Federal Deposit Insurance Corporation issued changes to leverage ratios, resulting in lower capital requirements. Kohl’s Corp surged 43% after raising its full-year outlook for the second-straight quarter. Abercrombie & Fitch Co soared 38% after raising the low end of its 2026 net sales and earnings per share guidance.
Shares of Amentum Holdings Inc rallied after the defence contractor posted fourth-quarter revenue growth. Oracle Corp dropped after being downgraded to 'hold' from 'buy' at CFRA on debt concerns.
Uploaded by Isabelle Francis
