Rate-Cut Expectations Fuel a Three-Day Rally on Wall Street; 10-Year Treasury Yield Breaks Below 4%

Market Overview

U.S. equities extended their winning streak to a third straight session on optimism over a potential Fed rate cut in December. The Dow gained more than 1%, while the S&P 500 and Nasdaq both climbed to two-week highs. The session showed a clear divergence within the AI complex: Nvidia plunged more than 7% intraday and closed down 2.6%, the only decliner among the “Magnificent 7,” while the Google-related AI ecosystem strengthened. Alphabet notched a third consecutive all-time high, and Meta surged nearly 4% on reports that it may adopt Googles TPU chips.

Meanwhile, U.S.-listed Chinese equities lagged, with Alibaba sliding more than 2%.

On the macro front, softer labor-market data and a cooler-than-expected PPI print pushed Treasury prices higher, sending the 10-year yield below the 4.0% level intraday for the first time this month. The U.S. Dollar Index retreated, while the offshore yuan strengthened sharply—breaking above 7.08 for the first time in 13 months.

In other assets, the recent rebound in cryptocurrencies lost momentum, with Bitcoin falling below $87,000. Crude oil slid nearly 3% to a one-month low as prospects for Russia-Ukraine peace talks improved. Gold futures, on the other hand, posted a third straight gain, hitting their highest close in over a week.

Hot Topics to Watch● U.S. September PPI Rises 0.3% MoM

Wholesale goods prices rose 0.9% in September, with 60% of the increase driven by higher gasoline costs. Excluding food and energy, core PPI grew 2.6% year-on-year—the softest pace since July 2024.

Nick Timiraos of the “Fed Whisperer” fame noted that the modest increase in wholesale prices suggests limited upside pressure on the Feds preferred inflation gauge, PCE.

● ADP Weekly Report

ADP data released Tuesday showed that U.S. private-sector employers reduced an average of 13,500 jobs per week over the past four weeks—sharply higher than the previous reports 2,500 job losses per week—indicating a clear acceleration in layoffs. Analysts noted that this trend further strengthens the case for a Fed rate cut in December.

Key Events to Watch (GMT+8)

21:30 US – Initial Jobless Claims (week ended Nov. 22), Durable Goods Orders (Sep)

23:30 US – EIA Crude Oil Inventories (week ended Nov. 21)

Overnight

22:15 US – Federal Reserve Beige Book release