With the Thanksgiving holiday a day away, the New York stock market heated up. Hopes revived that the Federal Reserve (Fed) will cut rates next month, and major tech stocks that had faced bubble concerns turned strong again, sending the three main indexes to close higher for the fourth straight session.
On the 26th (local time) at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average rose 405 points, or 0.9%, from the previous day to finish the session. The large-cap-focused Standard & Poor's (S&P) 500 also climbed 0.9%, extending a firm uptrend. The tech-heavy Nasdaq composite gained 1.0%, posting the biggest advance among the three indexes.
The biggest tailwind was interest rates. Bloomberg said the same day that "expectations that the Fed will cut rates have rekindled investor optimism." Typically, expectations for lower rates work in favor of growth and tech stocks, whose future value must be discounted to the present.
Technical indicators that reflect investor sentiment also had a positive effect on sentiment. The S&P 500 on the day regained its 50-day moving average, seen as an important technical support line. That signals the short-term price trend is stronger than the long-term trend. It is interpreted as having given market participants psychological reassurance that "now is a good time to buy."
The volatility index (VIX), the so-called "fear gauge" that indicates market anxiety, shrank sharply. The VIX fell more than 35% over the past four days, the steepest decline since mid-April. It is evidence that a sense of relief is spreading on Wall Street that "uncertainty is clearing."
By stock, big tech companies related to artificial intelligence (AI) advanced. Oracle in particular jumped more than 4% after Deutsche Bank maintained a positive investment view.
Nvidia, which had faltered on concerns about intensifying AI chip competition, also shook off worries and rebounded. Nvidia's rise lifted related hardware corporations such as Dell and Hewlett Packard Enterprise Company (HPE), pushing up the Nasdaq. Major tech stocks known as the Magnificent 7 (M7) appear to be seizing market leadership again.
Citing experts, CNBC said, "Typically, Thanksgiving week tends to be strong for stocks," adding, "Everyone's feeling good ahead of the holiday, and the market mood is also very positive (Everyone's feeling good)."
Economic data also helped stocks. Weekly initial jobless claims released that day defied market expectations for a slight increase and instead edged down from the prior week. That means the U.S. labor market remains solid. Bloomberg said it was interpreted as a "Goldilocks (neither too hot nor too cold)" reading that eased fears of a recession without undermining the Fed's rationale for rate cuts.
The bond market also stabilized. The 10-year U.S. Government Bonds yield, the benchmark rate, ended transactions near 4.00% with little change. Germany's 10-year bund yield stood at 2.67%, and the U.K.'s 10-year gilt yield fell 7 basis points (1 bp = 0.01 percentage point) to 4.42%, showing broadly steady moves across global bonds.
The dollar weakened. The Bloomberg Dollar Spot Index fell 0.3%. A weaker dollar is considered a positive for New York stocks because it can boost U.S. corporations' export competitiveness and help earnings. The yen traded at 156.49 per dollar, with the yen down 0.3% (a higher exchange rate), while the euro and the pound strengthened.
The cryptocurrency market also showed broad strength. Bitcoin rose 3.2% from the previous session to $89,826.92, nearing a break above the $90,000 level. Ethereum also climbed 3.3% to $3,025.99 in transactions, showing that risk-on sentiment has spread to coins.
International oil prices also rose. West Texas Intermediate (WTI) finished transactions up 1.2% at $58.62 per barrel. Gold also gained 0.9% to $4,167.78 per ounce.
The New York stock market will be closed on the 27th (local time) for Thanksgiving. The next day, the 28th, will see an early close at 1 p.m. Experts expect Black Friday sales, a gauge of consumer sentiment over the holiday, to set the tone for year-end trading.