"But it's always nice to finish things on a high note, with the S&P 500 and Nasdaq 100 both shooting higher (both closing Friday's session up less than 1%), thanks in part to good Nvidia ( NASDAQ:NVDA) numbers and constructive commentary from its CEO Jensen Huang as well as some encouraging comments from the Fed's John Williams, who sees "room for a further adjustment" (that adjustment would be a 25 bps rate cut) next month."
"While the initial excitement from Nvidia's record quarter faded quickly, there's a lot to be optimistic about going into year's end, especially if the Fed ends up slashing rates in December. If expectations are so incredibly high for AI winners like Nvidia, perhaps it takes not only confirmation that AI demand is robust enough to rule out a bubble, but also the prospect of more rate cuts from the Fed."
"Either way, investors might get both going into December, perhaps leading to a holiday relief rally, or a Santa rally, if you prefer. And moving into 2026, a "bad news is good news" kind of scenario could play out in a bigger way, as weaker employment data and news of more AI layoffs increase hopes for more interest rate cuts and a further reining in of AI spending, respectively."
The S&P 500 and Nasdaq 100 rose modestly, helped by Nvidia's strong results and positive comments from CEO Jensen Huang and Fed official John Williams. Williams signaled potential for a 25-basis-point rate cut next month, lifting odds of easier policy as employment data softens. Markets face heightened volatility amid mixed employment signals and shifting expectations for AI demand and corporate spending. High expectations for AI winners mean investors may require confirmation of sustained AI demand and further Fed easing to sustain rallies. A December rate cut and clearer evidence against an AI bubble could fuel a year-end Santa rally and affect 2026 dynamics.
Read at 24/7 Wall St.
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