Wall Street closed higher on Tuesday as traders reassessed the likelihood of a Federal Reserve interest rate cut next month and rotated through segments of the artificial intelligence trade. The Dow Jones Industrial Average led gains, rising 1.43% to 47,112.45. The S&P 500 added 0.91% and the Nasdaq rose 0.67%, recovering from intraday losses that had all three indexes briefly in the red.
Markets continue to focus on December’s policy meeting, with futures pricing an 83% chance of a quarter-point cut. Expectations firmed after reports that Kevin Hassett, current White House National Economic Council Director, has emerged as the frontrunner to become the next Fed chair. Investors interpret his potential appointment as signalling a shift toward a lower-rate regime. Treasury Secretary Scott Bessent said an announcement could come before Christmas.
AI sector adjusts as chip demand reshapes leadership
Tech stocks saw another session of active repositioning. Alphabet gained 1.5% to fresh record highs after reports that Meta Platforms is considering spending billions on the company’s AI chips. The prospect of Meta sourcing compute from Google fed expectations of rising AI demand, especially as Alphabet only last week unveiled its upgraded Gemini 3 model.
The development pressured Nvidia, which fell more than 2%, as investors questioned whether the dominant AI chipmaker may face increasing competition. Alphabet has now climbed more than 11% in the past five sessions, while Nvidia has shed roughly 4.5% over the same period. Despite the recovery earlier this week, the major US indexes remain on track for a losing month, with the S&P 500 down about 1% and the Nasdaq around 3% in November.
Dow leadership strengthens
Tuesday’s gains were broad across the Dow Industrials. Merck rose 4%, Home Depot climbed 3.9% and Nike advanced 2.9%, with 26 of the index’s 30 components finishing higher. Investors continued to rotate into names seen as well-positioned for a potential easing cycle.
Australian market outlook
Australian shares are set for a stronger open, with SPI 200 futures up 97 points, or 1.1%, to 8646 following the positive lead from New York and as the US 10-year yield briefly dipped below 4%.
Traders locally will watch Wednesday’s monthly CPI indicator, due at 11.30am AEDT. NAB is forecasting headline inflation of 3.6% year-on-year. Across the Tasman, the Reserve Bank of New Zealand is expected to cut its official cash rate by 25 basis points, with a statement due at midday AEDT.
Locally, a run of annual meetings is also on the agenda, including Harvey Norman, Liontown Resources, Lynas Rare Earths and Megaport.
