US Equity Indexes Rebound, Treasury Yields Sink as Fed Rate-Cut Odds Surge

04:41 PM EST, 11/21/2025 (MT Newswires) -- US equity indexes rebounded while government bond yields slumped on Friday as the odds of an interest-rate cut at the upcoming December Federal Reserve meeting almost doubled following remarks by a close ally of Fed Chair Jerome Powell.

The Nasdaq Composite advanced 0.9% to 22,273.08, with the S&P 500 up 1% to 6,602.99 and the Dow Jones Industrial Average 1.1% higher at 46,245.41. All sectors rose, led by communication services, consumer discretionary, and health care.

New York Fed President John Williams said Friday he sees room for "further adjustment" to rates in the near term. His statement helped investors in interpreting how the Fed would view the September nonfarm payrolls. That report showed job additions soared by more than twice the expected amount, and the unemployment rate came in higher than anticipated, exacerbating the divide between policy hawks and doves.

The dovish comments from Williams, reportedly a close ally of Chair Powell, could align with those of the central bank chief and, therefore, be influential in shaping consensus within the Federal Open Market Committee next month. Unlike most regional presidents who rotate, the New York Fed president is a permanent voter on the FOMC.

The likelihood of a 25-basis point cut in interest rates next month catapulted to about 70% late on Friday, up from 39% the previous day, according to the CME FedWatch Tool.

Most Treasury yields fell, with the 10-year down 3.9 basis points to 4.07% and the two-year lower by 5.1 basis points to 3.51%.

The US dollar depreciated 1% against the Japanese yen to 156.4.

The CBOE Volatility Index sank 11% to 23.43, retreating from its highest since April.

Meanwhile, in economic news, the November flash reading of manufacturing conditions from S&P Global fell to a four-month low of 51.9 from 52.5 in October, compared with an expected increase to 52.0 in a survey compiled by Bloomberg. The index for service conditions rose to a four-month high of 55.0 from 54.8, compared with expectations for a decline to 54.6. A reading above 50 indicates expansion.

The University of Michigan consumer sentiment index was revised higher to 51.0 for November from 50.3 in the preliminary estimate, versus the 50.6 outlook in a survey compiled by Bloomberg. That print was still below the final reading of 53.6 in October.

"After the federal shutdown ended, sentiment lifted slightly from its mid-month reading," Michigan said. "However, consumers remain frustrated about the persistence of high prices and weakening incomes."

Michigan survey respondents expect a 4.5% inflation rate over the next year and 3.4% annual inflation over the next five years, down from 4.6% and 3.9%, respectively, in October.

Oracle (ORCL) shares dropped 5.7%, the worst performer on the S&P 500, amid mounting concern over risk related to AI capital expenditure. The company's 5-year credit default swaps, which reflect the cost of insuring debt for investors, have surged past 110 basis points, the highest in three years, according to a report from FXStreet.

Earlier this month, Bloomberg reported that as many as 20 banks are providing $18 billion in funding to help fund the construction of a data center tied to Oracle in New Mexico. Oracle's total debt-to-equity ratio was almost 533% as of May, according to data compiled by FactSet.

Ross Stores (ROST) jumped 8.4%, the top gainer on the S&P 500 and the Nasdaq, after the discount retailer announced an unexpected increase in its fiscal third-quarter earnings.

In energy markets, West Texas Intermediate crude oil futures dived 1.8% to $57.94 a barrel.

MT Newswires does not provide investment advice. Unauthorized reproduction is strictly prohibited.