Stocks rose on Monday as investors digested new comments from Federal Reserve officials and AI companies rebounded from last week.
The S&P 500 ended the day up 1.6%. The Nasdaq Composite Index rose 2.7% to close at its highest level since May. The S&P 500 came within striking distance of accomplishing the same feat earlier in the session.
The increase came after two senior Federal Reserve officials expressed support for rate cuts at their next rate-setting meeting, scheduled for Dec. 9 and 10.
San Francisco Fed President Mary Daley told the Wall Street Journal that she supports lowering rates, citing a “fragile” labor market. Daley is not currently a voting member of the Federal Reserve’s Open Market Committee, but “he has rarely taken a public position that conflicts with Fed Chairman Jerome Powell,” the paper said.
Federal Reserve President Christoper Waller, who has a permanent vote on interest rates, also expressed concerns about the labor market on Fox Business Network.
“My concerns are mainly [the] “In terms of our dual mandate, we are focused on maintaining the health of the labor market,” Waller said. “That’s why I will advocate for a rate cut at our next meeting.”
Mr. Waller has been advocating for rate cuts in recent months, and his and Mr. Daley’s views emerged as the market tries to gauge how the upcoming Fed meeting will play out. Markets saw a rate cut as unlikely amid a flurry of cautious comments from Fed officials in recent days.
That all changed on Friday when New York Fed President William Williams signaled support for a rate cut, increasing the chance of a rate cut to about 60%. Mr. Williams also serves as vice chair of the Fed’s Interest Rate Setting Committee.
As of Monday afternoon, the probability of a rate cut was more than 85%, according to CME Group’s FedWatch, which tracks bets made by traders in the futures market on where interest rates will move.
Markets are closely monitoring Fed officials’ moves, as lower interest rates tend to lower borrowing costs, increase corporate profits and, in turn, increase stock market returns.
Meanwhile, a sharp rebound in large-cap tech stocks also boosted the index. Apple and Nvidia rose about 2%, Amazon stock rose 2.5% and Alphabet stock rose 6.3%.
Last week, Alphabet’s Google division announced a new AI model called Gemini 3.
Chipmakers of AI devices and services also showed widespread enthusiasm. Broadcom rose more than 11%, Micron soared 8% and AMD 5.5%.
