PrintEquities Rebound as Fed Rate Cut Bets Surge; Wall Street Logs Weekly Fall
BY MT Newswires | ECONOMIC | 11/21/25 05:04 PM EST05:04 PM EST, 11/21/2025 (MT Newswires) -- US equities advanced Friday as a Federal Reserve interest rate cut next month again seemed to be more likely than not, though Wall Street finished the week lower amid concerns over an artificial intelligence bubble.
All three major US equity benchmarks rebounded after Thursday's slump, with the Dow Jones Industrial Average closing 1.1% higher at 46,245.4. The S&P 500 climbed 1% to 6,603, while the Nasdaq Composite was up 0.9% at 22,273.1. All sectors ended higher, led by communication services.
On Friday, the probability that the central bank's Federal Open Market Committee will lower rates by 25 basis points in December surged to about 70% from Thursday's 39% and 44% a week ago, according to the CME FedWatch tool. The odds of rates remaining unchanged plunged to about 31% from 61%.
The shift came as New York Fed President John Williams said Friday that policymakers can afford to further reduce interest rates to support a weakening labor market.
"I view monetary policy as being modestly restrictive, although somewhat less so than before our recent actions," Williams said. "Therefore, I still see room for a further adjustment in the near term to the target range for the federal funds rate to move the stance of policy closer to the range of neutral, thereby maintaining the balance between the achievement of our two goals."
On Thursday, delayed government data showed the US economy added more jobs than projected in September, though the unemployment rate hit the highest level since 2021.
For the week, the Nasdaq declined 2.7%, its third consecutive weekly fall. The S&P 500 and the Dow shed 2% and 1.9%, respectively.
"Equity markets continued their choppy run this week, struggling under the weight of lofty tech valuations and some questions over Fed easing prospects," Robert Kavcic, senior economist at BMO, said in a report.
Valuations concerns have put tech and AI stocks under pressure lately.
Dallas Fed President Lorie Logan said Friday she's "not certain" if there's room for further monetary policy easing following two back-to-back cuts already delivered this year.
"In the absence of clear evidence that justifies further easing, holding rates steady for a time would allow the FOMC to better assess the degree of restriction from current policy," Logan said. "Taking the time to learn more can help us avoid unnecessary reversals that might generate unwanted financial and economic volatility."
The latest remarks by Williams and Logan come as the FOMC appears to be divided over the next monetary policy action amid high inflation and a weak labor market, as reflected in the minutes of the committee's October meeting released earlier this week.
US Treasury yields were lower, with the two-year rate dropping 2.7 basis points to 3.52% and the 10-year rate down 1.8 basis points at 4.07%.
In economic news, US consumer sentiment improved after the federal government shutdown ended, but remained downbeat amid macro pressures, final survey results for November from the University of Michigan showed.
Last week, the US Congress passed a legislation to fund the federal government through the end of January, ending weeks of stalemate between Republicans and Democrats that caused the longest-ever shutdown of 43 days.
West Texas Intermediate crude oil was down 1.8% at $57.95 a barrel in Friday late-afternoon trade.
"Oil extended losses as the US pushed for a Russia-Ukraine peace deal that could boost global supply," D.A. Davidson said in a note to clients.
In company news, Ross Stores
Enviri
Cloud computing company Oracle's (ORCL) shares fell 5.7%, the worst performer on the S&P 500.
Gold was down 0.1% at $4,057.40 per troy ounce, while silver fell 1.4% to $49.62 per ounce.
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