S&P 500 jumps as AI momentum returns

The S&P 500 rose Wednesday as AI stocks rebounded and risk appetite was boosted by expectations that the Federal Reserve will end the year with another rate cut next month.

At 3:14 p.m. ET (20:14 GMT), the Dow Jones Industrial Average rose 405 points, or 0.9%, the S&P 500 index gained 0.9%, and the NASDAQ Composite climbed 1%.

AI stocks climb; Dell’s Q4 outlook impresses

AI-stocks including NVIDIA Corporation (NASDAQ:NVDA) and Oracle Corporation (NYSE:ORCL) climbed, cutting some recent losses, after Deutsche Bank said the bear case for latter “looks bullish,” adding that future value of the company doesn’t reflect the value from its partnership with OpenAI.

Dell Technologies (NYSE:DELL) stock rose after the tech giant reporting an impressive outlook after Tuesday’s close.

Underpinned by soaring demand for its AI servers that are often equipped with Nvidia’s chips, Dell said it now expects to post fourth-quarter revenue of $31 billion to $32 billion, compared to LSEG estimates cited by Reuters of $27.59 billion.

Dell also raised its annual financial targets. Fiscal 2026 revenue is seen at $111.2 billion to $112.2 billion, versus a forecast of $105 billion to $109 billion previously. Its guidance for adjusted earnings per share was also lifted to $9.92.

On the flip side, HP (NYSE:HPQ) shares dropped after the computer and printer manufacturer issued disappointing guidance, saying it would cut 10% of its workforce.

Tech and AI-linked stocks have been nursing steep losses through November as investors fretted over a valuation bubble in the sector.

Elsewhere, agricultural equipment firm Deere & Company (NYSE:DE) stock fell after the agriculture machinery manufacturer reported a lower fourth-quarter profit, weighed down by weak margins from its tractors and combine harvesters.

Urban Outfitters (NASDAQ:URBN) stock surged after the clothing retailer announced sales for the third quarter increased over 12% to a record $1.53 billion.

Fed’s Beige Book in spotlight

Increased confidence that the Federal Reserve will cut interest rates next month has boosted sentiment, with a number of Fed policymakers speaking out in support of easing monetary policy over the course of the last few days.

Weaker-than-expected retail sales data for September indicated that the U.S. consumer was struggling, while data released earlier Wednesday showed that initial jobless claims increased by more than 200,000 last week.

Markets are pricing in an over 80% chance the Fed will cut rates by 25 basis points during its Dec. 9-10 meeting, up sharply from the roughly 40% chance seen last week, CME Fedwatch showed.

There will be special attention paid to the release of the Fed’s Beige Book later in the session.

“It provides anecdotal indications about the state of the economy – effectively replacing the delayed third-quarter GDP report,” said analysts at ING, in a note.

In October, the Beige Book signaled that while U.S. economic activity has been broadly stable, there have been emerging warnings of potential softening, particularly in increased layoffs and a pullback in spending by lower- and middle-income households.

The Fed will also receive more cues on inflation before its December meeting, with PCE price index data for September, which was expected to be released this week, being rescheduled to Dec. 5, the Commerce Department’s Bureau of Economic Analysis said on its website.

New Fed chair before Christmas?

Adding to the expectations of lower rates, U.S. Treasury Secretary Scott Bessent said on Tuesday he was concluding a second round of interviews later in the day for a new Federal Reserve leader, and there was a good chance President Donald Trump would announce his pick before Christmas.

White House economic adviser Kevin Hassett is seen as the frontrunner, Bloomberg reported, citing unnamed people familiar with the matter. Hassett, like Trump, has said interest rates should be lower than they are now under the leadership of Fed Chair Jerome Powell.

Get more stock picks by Wall Street analysts by upgrading to InvestingPro – get 60% off today