The Dow Jones Industrial Average closed higher on Tuesday, extending its recent winning streak as investors weighed the likelihood of a Federal Reserve rate cut and monitored developments in the artificial intelligence sector.
The Dow climbed 664.18 points, or 1.43%, to 47,112.45. The S&P 500 added 0.91% to 6,765.88, while the Nasdaq Composite rose 0.67% to 23,025.59. The gains marked a sharp reversal from earlier declines, when the S&P 500 slipped nearly 0.7% and both the Dow and Nasdaq fell more than 100 points, or as much as 1%.
Market participants continue to focus on signals that may influence the Fed’s next policy move. According to the CME FedWatch Tool, traders now assign nearly an 83% probability to a quarter-point rate cut in December.
Rate-cut expectations strengthened after a Bloomberg report indicated that Kevin Hassett, Director of the White House National Economic Council, is the leading candidate to become the next Fed chair. Investors view him as more inclined toward the lower-rate approach favored by President Donald Trump. Sentiment has also shifted following comments from New York Fed President John Williams, who said Friday that there is room to ease policy “in the near term.”
“Before Friday, we had a 40% chance of a Fed rate cut. Now it’s 80%. I’ve never seen expectations swing this fast,” said Ron Albahary, CIO at LNW. “The narrative appears to be moving toward a December 10 cut, which could support a Santa Claus rally.”
Alphabet was among the top performers, gaining 1.5% and hitting fresh record highs after The Information reported that Meta Platforms may spend billions on the company’s AI chips. Combined with Alphabet’s recent unveiling of its upgraded AI model, Gemini 3, investors are increasingly confident in AI’s broader economic impact. Lower computing costs, Albahary noted, could allow non-tech firms to tap into productivity benefits and bolster earnings.
However, Nvidia fell more than 2%, as some investors interpreted the Meta–Alphabet developments as a potential challenge to its dominance in AI semiconductors.
Alphabet’s advance followed a more than 6% surge the previous day, which also saw the Nasdaq post its strongest session since mid-May. Momentum has also supported Broadcom, a key player in high-performance ASIC chip development.
Despite recent gains, major U.S. indexes remain on pace for monthly losses amid ongoing concerns about stretched tech valuations. The S&P 500 is down about 1% in November, the Nasdaq roughly 3%, and the Dow approximately 1% month-to-date.
