US equities advanced sharply on Tuesday, extending the week’s upward momentum as strengthening expectations of a Federal Reserve interest rate cut in December fueled broad-based gains across major indices.
The Dow Jones Industrial Average surged more than 705 points, rising 1.52% to close at 47,153.60. The S&P 500 gained 0.7%, while the Nasdaq Composite reversed early losses to finish 0.4% higher. Small-cap stocks outperformed, with the Russell 2000 climbing 2.27% amid optimism that lower borrowing costs will ease pressure on debt-laden companies.
Market confidence was bolstered after Federal Reserve Governor Chris Waller signaled support for monetary easing, reinforcing investor bets of a more than 80% probability of a quarter-point rate cut next month. Recent shutdown-delayed economic data, including softer-than-expected retail sales and a moderate rise in producer prices, further strengthened expectations that the Fed may move to support growth.
Shares of Nvidia faced strong downward pressure, sliding as much as 6.5% following reports that Meta may increase its investment in Google’s AI chips—an emerging competitive challenge to Nvidia’s market leadership in advanced semiconductors. Despite the drag, the broader tech sector remained resilient, supported by improving sentiment and the continued momentum of AI-driven innovation.
Political developments also contributed to Tuesday’s gains. Markets rallied to session highs following reports that Kevin Hassett, White House National Economic Council Director, is emerging as the leading candidate to succeed Federal Reserve Chair Jerome Powell when his term ends in 2026. Investors anticipate that Hassett, a close ally of President Trump, would likely favor a more accommodative rate policy.
Elsewhere, Zoom Video Communications shares jumped more than 15% after the company delivered an upbeat outlook and highlighted accelerating adoption of its AI-powered tools. Retailers including Kohl’s and Best Buy are set to report earnings this week ahead of the Thanksgiving holiday, with markets scheduled for early closure on Friday.
Analysts at UBS, Goldman Sachs, and Morgan Stanley remain optimistic about market performance heading into 2026, citing expected rate cuts, stable corporate earnings, and sustained growth in AI-related sectors.
