Stocks rallied on Monday as investors digested fresh comments from top Fed officials and AI companies rebounded from last week.
As of later-afternoon trading, the S&P 500 was higher by more than 1.5% and the Nasdaq Composite was trading higher by 2.6%, putting the latter on track for its best day since May.
The S&P 500 was also within striking distance of achieving the same feat, up 1.6%.
The rally came after two top Fed officials voiced support for an interest rate cut at the central bank’s next rate-setting meeting, slated for Dec. 9 and 10.
Mary Daly, president of the Federal Reserve Bank of San Francisco, told The Wall Street Journal that she supported lowering rates due to the “vulnerable” labor market. While Daly is not a current voting member of the Fed’s Open Market Committee,” she has rarely taken a public position at odds with Fed Chair Jerome Powell,” the Journal noted.
Federal Reserve Governor Christoper Waller, who has a permanent vote on interest rates, also voiced concern about the labor market on Fox Business Network.
“My concern is mainly [the] labor market in terms of our dual mandate,” Waller said. “So I’m advocating for a rate cut at the next meeting.”
While Waller has been advocating for a cut for months, his and Daly’s views come as markets try to work out how the upcoming Fed meeting will go. In recent days, markets viewed a rate cut as unlikely amid a wave of cautious comments from Fed officials.
That all changed Friday when New York Fed President John Williams signaled his support for a cut. That sent the chance of a rate cut soaring to around 60%. Williams also serves as Vice Chair of the Fed’s rate-setting committee.
As of Monday afternoon, odds of a cut now sit above 85%, according to the CME Group’s FedWatch, which tracks bets that traders place in the futures market on where they see interest rates going.
Markets are closely tracking Fed officials because lower interest rates tend to lower borrowing costs, boosting corporate profits and therefore stock market returns.
Meanwhile, a sharp rebound in megacap tech stocks also pushed indexes higher. Apple and Nvidia rose around 2%, Amazon shares jumped nearly 3% and Alphabet shares surged almost 6.5%.
Last week, Alphabet’s Google division announced a new AI model called Gemini 3.
Chipmakers for AI devices and services also saw broad enthusiasm. Broadcom traded higher by more than 11% while Micron jumped 7% and AMD popped 6%.