Fed rate-cut odds hit 89% as weak US data push equities higher and drag the US dollar lower
Traders are treating soft US economic data as a green light for more easing, pushing equities higher and knocking the US dollar lower, even as signs of labour-market fatigue mount.
According to CNBC, US stocks rose on Wednesday after payrolls processor ADP reported that private payrolls fell by 32,000 in November, against expectations for a 40,000 gain.
Markets took the surprise decline as support for a rate cut at the Federal Reserve’s meeting next week.
As per Reuters, Fed funds futures now imply about an 89 percent chance of a 25-basis-point cut at the December meeting, up from roughly 83 percent a week earlier.
ANZ economist Henry Russell said on a podcast cited by Reuters that weaker prices in the latest US services data “align” with a view that supercore inflation will subside and that it is appropriate for the Fed to “continue to cut interest rates” to address downside labour risks.
The move in rates expectations is already shaping sector performance.
CNBC reported that financials such as Wells Fargo and American Express gained as investors priced in a friendlier loan-growth backdrop in a lower-rate environment.
At the same time, CNBC said AI‑linked tech names came under pressure: Microsoft dropped 2.5 percent after a report it was cutting AI‑related sales quotas, although the company denied lowering sales quotas for salespeople, while Nvidia, Broadcom and Micron Technology also declined.
Equity leadership remains narrow.
CNBC noted that the Dow added 0.86 percent, the S&P 500 rose 0.30 percent and the Nasdaq advanced 0.17 percent, with small caps outperforming as the Russell 2000 climbed 1.9 percent.
Bloomberg separately reported that, despite recent gains, most S&P 500 constituents fell on one of the up days this week, underlining how concentrated the rally has become.
Beyond the megacaps, stock selection mattered.
CNBC said Marvell Technology jumped almost 8 percent on enthusiasm for its data centre growth outlook, while American Eagle Outfitters surged about 15 percent after it raised its full‑year forecast and said the holiday shopping season is off to a strong start.
Scott Welch, chief investment officer at Certuity, told CNBC “the market is starting to separate the winners from the losers” in AI and called this “the very beginning of a transformational market,” highlighting the importance of tracking leverage used to finance data centres.
Currency and commodity moves reinforced the easing narrative.
Reuters reported that the US dollar index fell 0.4 percent to its lowest level since late October, marking a ninth straight daily decline, while the yield on the 10‑year US Treasury held around 4.07 percent.
Reuters also said gold rose 0.2 percent to about US$4,213 per ounce and silver gained 0.1 percent to roughly US$58.54 per ounce, extending a rally that recently took silver to a record high.
Risk appetite in crypto has also re‑emerged.
CNBC reported that Bitcoin traded above US$93,000 on Wednesday, rebounding after its worst single day since March earlier in the week.
