The S&P 500 kicked off the week with a solid gain of more than 1%, once again surpassing the 6,700-point mark, boosted by renewed optimism over a potential interest rate cut by the Federal Reserve in December. This rebound helped offset the recent pressure on the technology sector, which had weighed on overall market performance for much of November.
Even so, November remains a challenging month for Wall Street: the S&P 500 is down 3.5%, reflecting a natural adjustment after months of strong growth and rising investor caution regarding macroeconomic risks. Volatility has also intensified across tech-heavy indices, where elevated valuations remain a significant concern.
Market sentiment improved notably after comments from Fed officials John Williams and Christopher Waller, who signaled support for a possible rate cut in December. This more dovish tone pushed the probability of a 25-basis-point cut to 69%, up from 44% just a week earlier, fueling expectations of a more favorable year-end for risk assets.
However, the path of monetary policy still depends on the release of key economic data that was delayed by the government shutdown. This includes producer inflation, retail sales, industrial production, and third-quarter GDP figures that could shift market expectations in the coming days.
Despite the pending data, significant information gaps remain that could limit the Fed’s ability to make a fully informed decision in December. The absence of the November jobs report, which will be released after the meeting, poses a challenge since the labor market remains a key pillar in assessing economic strength.
Some analysts warn that an early rate cut could increase volatility, especially if upcoming data reveals a deeper-than-expected slowdown. In such a scenario, the “soft landing” narrative could come under pressure, forcing investors to shift strategies toward more defensive sectors.
With the market divided between expectations of monetary stimulus and signs of economic cooling, the coming days will be crucial in determining whether the S&P 500 consolidates its rebound or if caution takes over once again. The reaction to the delayed economic data will set the tone leading up to the Fed meeting and will largely shape how Wall Street closes 2025.
In conclusion, the S&;P 500’s rebound reflects renewed optimism about a potential rate cut, but doubts persist amid an incomplete economic picture and the risks of further slowdown. Market attention will remain focused on the delayed key data, which will be decisive for the Federal Reserve’s decision and for the direction of the markets heading into the end of 2025.