Wall St ends higher on growing bets for December Fed rate cut

By Stephen Culp

NEW YORK (Reuters) -Wall Street extended its rally on Wednesday as revived tech strength and the increasing probability of a December interest rate cut from the U.S. Federal Reserve put investors in a buying mood the day before the Thanksgiving holiday.

All three major U.S. stock indexes notched their fourth consecutive daily gains, as investors looked past the worries over inflated tech valuations that dragged all three to losses last week.?

Those fears ebbed in the aftermath of artificial intelligence doyen Nvidia's (NVDA) upbeat quarterly results and forward guidance, and were eased further by AI server maker Dell Technologies' (DELL) consensus-beating fourth-quarter revenue forecast.

"Today and the half day on Friday are fairly light days from a trading standpoint and it's a pattern that you typically see I think around holidays like Thanksgiving where shortened volume and a little bit more optimism from retail investors," said Chuck Carlson, chief executive officer at Horizon Investment Services in Hammond, Indiana.

"The other factor is, in the last few days, Wall Street has pivoted backward rather strongly to the notion that the Fed's going to cut rates in December," Carlson added. "And I think that's probably the biggest impetus for the market, not just for today, but for the recent days."

A poll conducted by Reuters showed that, on average, analysts expect the S&P 500 to rise by 12% between now and year-end 2026, powered by a robust economy, continued tech sector strength and an accommodative Fed.

The Fed's Beige Book, which summarizes economic conditions by district, appeared to have little to no effect on rate cut expectations.

Financial markets are currently pricing in an 84.9% probability that the central bank will implement a 25-basis-point reduction to its key Fed funds target rate at the conclusion of its December policy meeting, according to CME's FedWatch tool.

Airlines were sharply higher on what is traditionally the busiest travel day of the year for commercial carriers. The S&P 1500 Airlines index jumped 3.0%.

Air traffic is often viewed as a barometer of consumer health, which bodes well heading into the holiday shopping season, which kicks off on Thanksgiving and is followed by Black Friday and Cyber Monday. The period is crucial for U.S. retailers as they court shoppers and navigate tariff-squeezed profit margins and a wave of corporate layoffs.

Even so, while the National Retail Federation forecasts 2025 holiday sales to surpass $1 trillion for the first time, forecasts from discount retailers such as Walmart (WMT) and Target have been mixed.

Economic data showed consensus-topping core capital goods orders in September. While the report from the Commerce Department is stale due to government shutdown delays, it suggests corporate expenditures are more robust than economists predicted.

On the other hand, while initial claims for unemployment insurance landed below consensus, ongoing claims remain on an upward trend, supporting recent survey data showing consumers' assessment of the labor market is deteriorating.

The Dow Jones Industrial Average rose?314.67 points, or 0.67%, to 47,427.12, the S&P 500 gained?46.73 points, or 0.69%, to 6,812.61 and the Nasdaq Composite gained?189.10 points, or 0.82%, to 23,214.69.?

Among the 11 major sectors in the S&P 500, utilities topped percentage gainers, while communication services suffered the biggest drop.

Dell Technologies (DELL) jumped 5.8% in the wake of its better-than-expected earnings and upbeat forecast.

Human resources software firm Workday slid 7.9% after the company reported third-quarter subscription revenue in line with estimates.

Deere's weaker-than-expected annual profit forecast, weighed down by tariff effects, sent the heavy machinery maker's shares down 5.7%.

Advancing issues outnumbered decliners by a 3.37-to-1 ratio on the NYSE.?There were?290?new highs and 29 new lows on the NYSE.

On the Nasdaq, 3,183 stocks rose and 1,492 fell as advancing issues outnumbered decliners by a 2.13-to-1 ratio.?

The S&P 500 posted?34 new 52-week highs and no new lows while the Nasdaq Composite recorded 133 new highs and 48 new lows.

Volume on U.S. exchanges was 14.78 billion shares, compared with the 19.49 billion average for the full session over the last 20 trading days.

(Reporting by Stephen Culp; Additional reporting by Johann M Cherian and Pranav Kashyap in Bengaluru; Editing by David Gregorio)