The Economic Times·2025-11-29 03:48Market Overview - Stocks rebounded this week from their largest pullback since April, driven by increasing confidence that the U.S. Federal Reserve will cut interest rates in December [1][15] - The S&P 500 is up approximately 16% in 2025, with December historically being a strong month for the index, averaging a 1.43% gain since 1950 [2][15] - The S&P 500 was 1% off its late-October all-time high, while the Nasdaq Composite was down 3% from its late-October peak [6][15] AI Sector Insights - Concerns are rising regarding the profitability of AI, with market strategists indicating that if this issue escalates, it could significantly impact the market [2][15] - Alphabet, previously viewed as an AI laggard, has seen its market value rise to around $4 trillion, bolstered by positive reviews for its new Gemini 3 AI model [7][15] - Nvidia's shares have been affected by reports of Meta Platforms potentially spending billions on Google's chips, highlighting the volatility in the AI sector [7][15] Economic Indicators - Upcoming economic releases will focus on manufacturing, services activity, and consumer sentiment, with earnings reports from Salesforce, Kroger, and Dollar Tree expected [8][15] - Many economic data releases have been delayed due to the recent U.S. government shutdown, leading to uncertainty in gauging the economy's health [9][15] - A more comprehensive view of the economy may not be available until January, as investors navigate through the current uncertainty [10][15] Federal Reserve Expectations - Traders are increasingly betting on a rate cut by the Federal Reserve at its December 9-10 meeting, with over 80% odds reflected in Fed funds futures [11][15] - Potential monetary easing could benefit broader market segments beyond technology and AI stocks, with rate-sensitive shares of smaller companies outperforming recently [11][15] - Market strategists are monitoring whether a Fed rate cut could generate positive momentum in sectors outside of technology [12][15]