Closing Recap 

U.S. stocks roared back to life on Monday, staging a powerful rally to kick off the holiday-shortened week as dovish commentary from Fed officials reignited hopes for a December interest rate cut. The tech-heavy Nasdaq led the charge, surging an incredible 2.69%, its best day since May, as investors aggressively bought the dip in beaten-up AI and mega-cap names. The rally was broad-based, with advancers outpacing decliners by a 2:1 margin and ten of eleven S&P sectors finishing in the green.

The renewed optimism was fueled by remarks from dovish-leaning Fed officials, including Christopher Waller and Mary Daly, who both voiced support for a December cut, sending the probability soaring to 75%. This dovish repricing weighed on the U.S. dollar and sent gold prices higher. Crude oil also found a bid, while Bitcoin staged a notable recovery after a brutal sell-off. 

Key Takeaways 

• Massive Tech Rebound: The Nasdaq surged 2.69% in its best single-day performance since May, as investors aggressively bought the dip in mega-cap tech and AI-related stocks after weeks of selling. 
• Dovish Fed Bets Soar to 81%: The probability of a December Fed rate cut jumped to 81% after dovish-leaning Fed officials, including Governor Waller, openly advocated for another cut, fueling a powerful risk-on rally. 
• Broad Rally Lifts All Boats: The S&P 500 gained 1.55% with strong market breadth, a stark reversal from the narrow, defensive-led action seen in recent weeks. 
• Dollar Eases, Gold and Oil Rise: The U.S. dollar was little changed but softened as rate cut bets increased, providing a tailwind for commodities. Gold rose 0.35% to settle at $4,094, and WTI crude gained 1.34%. 
• Bitcoin Recovers After Worst Week Since February: The crypto market participated in the risk-on move, with Bitcoin rebounding to trade near $89,000 after suffering its worst weekly performance since February. 
• Morgan Stanley Calls for 7,800 S&P 500: Adding to the bullish mood, Morgan Stanley strategist Michael Wilson turned notably positive, predicting a 1,000-point rally for the S&P 500 over the next year. 
• Data Deluge Begins Tuesday: The market is now bracing for a heavy slate of delayed U.S. economic data for September, including PPI and Retail Sales, which will test the market’s newfound optimism. 

Market Overview

Last week’s brief period of market anxiety is already a distant memory. After a brutal few weeks of selling, the bulls came storming back on Monday. The catalyst was a clear and decisive dovish shift from key members of the Federal Reserve. Remarks from Governor Waller and SF Fed President Daly, both signaling their support for a December rate cut, were exactly what the market was desperate to hear. This immediately sent rate cut probabilities soaring and unleashed a wave of buying across risk assets. The price action was a mirror image of last week’s fear, with the beaten-down technology and consumer discretionary sectors leading the charge. The rally was powerful enough to push major indices back above the key technical levels they had breached last week, a positive sign for the bulls. The “buy the dip” mentality was on full display as investors piled back into the market’s leaders, with the tech-heavy Nasdaq soaring over 2.2% in its best single day since May.

Index	Up/Down	%	Last
DJ Industrials	202.86	0.0044	46448
S&P 500	102.03	0.0155	6705
Nasdaq	598.92	0.0269	22872
Russell 2000	44.7	0.0189	2414

Adding fuel to the fire, Morgan Stanley’s influential strategist Michael Wilson, who has been cautious for much of the year, turned aggressively bullish, calling for the S&P 500 to rally to 7,800 and advising clients to treat any near-term weakness as a buying opportunity. This potent combination of dovish Fed-speak and bullish strategist calls has set a positive tone for the holiday-shortened week. However, the market’s conviction will be put to the test starting tomorrow, as a deluge of long-delayed economic data for September finally begins to be released, which will provide the first real evidence of whether the Fed’s dovish pivot is justified.

Economic Calendar 

This is a holiday-shortened week in the U.S. due to Thanksgiving on Thursday. Data Released Earlier / Overnight: 

• German Q3 Final GDP: Confirmed at 0.0% q/q, showing the German economy stagnated in the third quarter. 

Today’s Economic Calendar: 

The data deluge begins today, with the market getting its first look at September’s U.S. activity in weeks. 

• European Session: An extremely light calendar with only a few central bank speakers scheduled. 
• U.S. Session: The main focus will be on the start of a wave of delayed September data, including Producer Price Index (PPI) and Retail Sales. The weekly ADP jobs report will also be closely watched. 
• 13:30 GMT – U.S. September Retail Sales & PPI. 
• 14:00 GMT – U.S. Consumer Confidence (Oct). 

Reminder: This is a holiday-shortened week in the U.S., with markets closed Thursday for Thanksgiving and a half-day session on Friday.

Asset Class Spotlight: FX, Commodities, Bonds & Crypto

The big story in commodities is the powerful rebound in Gold. Gold prices rose for a second day, with December futures settling up 0.36% at $4,094.20 an ounce. The metal is benefiting from the sharp increase in Fed rate cut expectations and a slightly weaker U.S. dollar. Crude oil prices also found a bid, with WTI rallying 1.34% to settle at $58.84 a barrel. The rebound was driven by the broad improvement in risk sentiment and dip-buying after a steep sell-off last week.

Asset	Up/Down	Unit / % Change	Last
WTI Crude	0.78	0.0134	58.84
Gold	14.7	0.0036	4094.2
EUR/USD	0.0004	0.0003	1.1519
USD/JPY	0.74	0.0047	157.12
Bitcoin	1500	0.017	88650
10-Year Note Yield	-0.023	-0.0056	0.0404

The U.S. dollar was on the back foot as the sharp rebound in Fed rate cut bets weighed on the greenback, providing relief for G10 currencies. 

• EUR/USD: The pair edged higher for a second day, trading around 1.1530 as the dollar softened. The divergent policy expectations between a potentially dovish Fed and a steady ECB are providing a tailwind for the single currency. A very large $1.8B options expiry at the 1.1625 level sits above the current price and could act as a resistance cap.
• GBP/USD: The pound lost ground, trading near 1.3100 as domestic concerns weigh on the currency. Softer inflation data has boosted bets for a December BoE rate cut, while the upcoming UK budget is another source of uncertainty. 
• USD/JPY: The yen remains weak, with the pair holding firm near 157.00. While Japanese officials have issued stronger verbal warnings, the market appears unfazed, focusing instead on the Bank of Japan’s dovish stance and the government’s push for massive fiscal stimulus. A large $903M options expiry at the 156.00 level could provide some support below the current price.

Cryptocurrencies: After a brutal week, the crypto market staged a relief rally. Bitcoin bounced back to trade near $89,000, participating in the broader risk-on move. However, the market remains fragile after suffering its worst week since February, with analysts at Deutsche Bank highlighting a number of macro and regulatory headwinds. U.S. Treasury yields fell as investors increased their bets on a December rate cut. The benchmark 10-year yield dropped 2.3 basis points to 4.04%, reflecting the market’s renewed dovish outlook for the Federal Reserve. 

Looking Ahead 

The market’s newfound optimism will be put to the test starting today as a heavy slate of delayed U.S. economic data for September is finally released. The PPI and Retail Sales reports will be the first major tests. Stronger-than-expected data could quickly reverse the current dovish sentiment and weigh on risk assets. Conversely, signs of a significant slowdown could cement expectations for a December cut and fuel a year-end “Santa Claus Rally.” Traders should be prepared for a volatile, holiday-shortened week, with month-end flows also likely to impact price action.

What to Watch

• The Data Deluge is Here: After weeks of flying blind, the market will finally get a flood of delayed economic data. Today’s September Retail Sales and PPI reports will be critical in confirming or denying the dovish narrative that is currently driving markets. Expect significant volatility. 
• Thanksgiving Seasonality: Be aware of historical seasonal patterns. The U.S. dollar tends to be weak in the days leading up to Thanksgiving, a pattern that is currently in play. Gold, on the other hand, tends to perform strongly on the Tuesday before and Friday after the holiday. 
• The AI Rally’s Second Wind: The powerful rebound in tech shows the AI narrative is far from over. Morgan Stanley remains a strong bull, calling for the S&P 500 to hit 7,800 and advising clients to use any short-term weakness as a buying opportunity. 
• Bitcoin’s Fragile Bounce: Bitcoin’s rebound is a positive sign for risk assets, but the technical and fundamental picture remains weak. The key test will be whether it can reclaim the $100,000 level or if this is just a relief bounce in a new bear market.