The stock market pulled off a nice comeback during the shortened holiday week, and the catalyst was pretty straightforward: Federal Reserve officials suddenly started sounding a lot more dovish about cutting rates in December.
Here's what changed. Several Fed members came out and openly signaled support for a 25-basis-point rate cut at the upcoming December 10 meeting. That's a big shift from the vibes just a week ago, when markets were pricing the odds of a cut at 50% or less. Now? Those odds have rocketed to nearly 90%, according to market pricing.
Remember when Fed Chair Jerome Powell said back in October that a December cut was "far from" guaranteed? That hawkish tone seems to be fading as Powell's term winds down toward its May 2026 end date. The market is moving on, basically.
Speaking of succession planning, the chatter around Powell's replacement picked up this week. Kevin Hassett, the former White House economist who now heads the National Economic Council, emerged as the frontrunner. His odds of getting a Trump nomination jumped to 57%, and analysts are already gaming out a more dovish Fed pivot in 2026 if he gets the job.
On the stock front, Alphabet Inc. (GOOGL) was the week's clear winner. The Google parent leapfrogged Microsoft Corp. (MSFT) to become the world's third-largest publicly traded company, crossing the $4 trillion market cap threshold. The surge came on fresh investor enthusiasm about Alphabet's AI progress, with the company rolling out multiple new AI features and enterprise tools in recent weeks.
Not everyone in Big Tech shared the love. Nvidia Corp. (NVDA) closed out November as its worst month since March. Part of the problem? Reports emerged that Meta Platforms Inc. (META) is considering a multibillion-dollar investment in Alphabet's custom AI chips. That's raising questions about whether Nvidia's dominance in the AI chip space is as unshakeable as it seemed a few months ago.
The AI excitement is spreading beyond the usual tech suspects, too. Healthcare—tracked by the Health Care Select Sector SPDR Fund (XLV)—just posted its strongest month since the COVID-19 pandemic. AI is helping speed up the R&D cycle in drug development, and several biotech names notched double-digit weekly gains. That's a sign investors are getting comfortable taking risk again in beaten-down sectors.
And here's a subplot you might have missed: Detroit is quietly having a moment. General Motors Co. (GM) hit a new all-time high of $72 on Wednesday, marking its fifth consecutive month in the green. The stock is up 37% year-to-date, which is a pretty remarkable turnaround story given all the hand-wringing about U.S. manufacturing. Sometimes the market surprises you.
