Major U.S. stock indexes opened higher on Wednesday (26th) and continued their gains this week. Major indexes such as the S&P 500 and Nasdaq rose for four consecutive days. Investors continued to digest a new round of economic data, and market expectations for an interest rate cut by the Federal Reserve (Fed) in December further increased. Before the Thanksgiving holiday, optimism about interest rate cuts supported buying sentiment, and sentiment on U.S. stocks improved significantly.
Before the deadline, the Dow Jones Industrial Average rose more than 250 points or nearly 0.5%, the Nasdaq Composite Index rose nearly 120 points or nearly 0.5%, the S&P 500 Index rose nearly 0.5%, and the Philadelphia Semiconductor Index rose more than 1.4%.
U.S. stock futures rose on Wednesday, as investor optimism about interest rate cuts extended a recent rebound and sentiment improved significantly ahead of the Thanksgiving holiday. UK assets rose during the Budget.
S&P 500 futures are expected to extend a three-day streak of gains of 3.5%, with sectors generally moving higher. US stocks also received technical support, with the S&P 500 regaining its 50-day moving average. Alphabet (GOOGL-US) maintained steady pre-market trends after hitting record highs for three consecutive days; Nasdaq 100 futures rose 0.5%.
The U.S. 10-year Treasury bond yield rose 2 basis points to 4.02%. The initial unemployment benefits data was slightly lower than market expectations, causing the yield to rise from lows. The dollar was little changed.
U.S. stocks stabilize as interest rate cut expectations support investment sentiment
U.S. stocks fluctuated violently at the beginning of this month due to concerns that technology stocks were overvalued, but in recent days the market has regained buying support. Recent dovish remarks from Federal Reserve officials have reignited market bets on a rate cut in December.
Expectations for a rate cut increased further after White House sources revealed that National Economic Council (NEC) Director Kevin Hassett has become the front-runner to become the next Fed chairman. Investors generally believe that he is consistent with U.S. President Trump’s policy direction and is more inclined to support a lower interest rate environment.
Interest rate futures show that the market currently estimates that the probability of the Fed cutting interest rates by 1 point (25 basis points) next month is about 80%, and is betting that there will be three more interest rate cuts before the end of 2026; a week ago, the market only expected a total of three interest rate cuts. Daniel Murray, deputy chief investment officer at EFG Asset Management, said: “The market’s rapid rebound from the previous pullback shows that there is still quite strong underlying buying.”
At the same time, many large banks have begun to make optimistic forecasts for the US stock market in 2026. Deutsche Bank predicts that the S&P 500 will rise to 8,000 points by the end of 2026, which would mean an increase of about 18% from current levels, supported by corporate profits and treasury stock buybacks. JP Morgan predicted 7,500 points, while Societe Generale set a target of 7,300 points.
However, Valerie Charriere, head of European equities at BNP Paribas AM, believes that the short-term outlook is still affected by recent volatility. “I don’t think a typical Christmas market will occur. There are some cracks in the valuation of artificial intelligence (AI), and there is also uncertainty about Fed policy. The performance so far this year has been too strong, and the market may turn to defensive sectors.”
British budget boosts market, pound and British bonds strengthen simultaneously
In the UK, Finance Minister Rachel Reeves announced a budget in Congress, increasing the fiscal buffer to 22 billion pounds (approximately US$29 billion). She cited new tax revenue as the main source, including higher taxes on the gambling industry and high-priced real estate.
The pound and UK government bond yields rose during her remarks. Earlier, the Office for Budget Responsibility (OBR) unexpectedly released part of its analysis in advance, causing fluctuations in British assets.
Matthew Ryan, head of market strategy at Ebury, pointed out that the additional fiscal space will help reduce the chance of the government raising taxes again in the future, but the market still needs to observe whether this “fiscal austerity” can coexist with “economic growth.”
The “Bloomberg” strategy team warned that British political uncertainty remains the biggest risk for the bond market. “The market may not be very satisfied with the current government, but if there is another change in leadership and policy shifts to a looser fiscal path, yields may fluctuate wildly again.”
As of 22:00 Taipei time on Wednesday (26th):
Focus stocks:
Dell (DELL-US) shares rose 3.99% in early trading to $130.79 per share
Dell shares rose more than 4% before the market opened. On the news, Dell announced its third-quarter results for fiscal year 2026. Revenue increased by 11% year-on-year to US$27.005 billion, a new high; adjusted earnings per share were US$2.59, which was better than analysts’ consensus estimate of US$2.48. During the period, the company received US$12.3 billion in AI server orders, shipped orders worth US$5.6 billion, and had orders on hand at the end of the quarter reaching US$18.4 billion.
HP (HPQ-US) shares rose 0.34% in early trading to $24.40 per share
HP fell nearly 2% before the market opened. On the news, HP announced fourth-quarter results. Revenue increased 4.2% year-on-year to $14.64 billion, exceeding analysts’ expectations of $14.5 billion. Profit was $795 million, or 84 cents per share, down from 93 cents in the same period last year. Adjusted earnings per share were 93 cents, slightly higher than analysts’ expectations of 92 cents. Affected by rising memory chip prices, adjusted earnings per share for the current fiscal year are expected to be between $2.9 and $3.2, below analysts’ expectations of $3.34.
Meta (META-US) shares fell 0.19% in early trading to $635.00 per share
Italy’s Competition and Market Authority (AGCM) said on Wednesday that it had expanded the scope of its antitrust investigation into Meta, focusing on WhatsApp’s updated business platform terms and new artificial intelligence (AI) chatbot tools within the app. Regulators have also initiated procedures to consider interim measures, which may require Meta to suspend new terms and restrict further integration of Meta AI on WhatsApp.
Today’s key economic data:
- The initial monthly growth rate of U.S. durable goods orders in September was 0.5%, expected to be 0.5%, and the previous value was 3.0%
- The initial monthly growth rate of core durable goods orders in the United States in September was 0.6%, which was expected to be 0.2%, and the previous value was 0.3%.
- The number of people claiming unemployment benefits in the United States last week was 216,000, compared with the expected 225,000, and the previous value of 222,000
- The number of Americans continuing to receive unemployment benefits last week reported 1.96 million, 1.969 million expected, and the previous value of 1.953 million
- The monthly growth rate of building permits in the United States in September is expected to be -11.5%, compared with the previous value of 20.5%
- U.S. new home sales in September are expected to total 709,000 at an annualized rate, compared with the previous value of 800,000.
Wall Street analysis:
Christopher, global head of investment strategy at Wells Fargo (WFC-US) Investment Institute, believes that although the growth prospects in the AI field can still last for several years, he recommends investors to diversify their investment layout.
Christopher explained that the bank has recently rotated out of some technology (XLK) and communication services (XLC) stocks and invested in other sectors with more reasonable valuations while still grasping technology trends.
He said: “We have reduced our allocation to the communications services sector. We believe that the sector’s valuation is slightly overvalued. We have rotated this part of the funds into the utility sector (XLU), whose price-to-earnings ratio is only 20 times.”
