US stocks climb as AI sector rebounds and Fed rate-cut optimism returns

Wall Street rallied on Monday, adding to its recent rebound as renewed expectations of a US interest-rate cut lifted market sentiment after last week’s volatile trading driven by concerns over an AI tech bubble.

Tech heavyweights led the advance, with Alphabet jumping 6.3 percent after strong reviews for its latest AI release. The Nasdaq gained 2.7 percent, supported by solid performances from Apple, Tesla, and other major names. Friday’s gains had already been buoyed by comments from New York Fed President John Williams, who suggested the central bank could lower rates in December.

Further fueling optimism, Federal Reserve Governor Christopher Waller told Fox Business on Monday that he supports a rate cut next month, citing a “still weak” labor market.

European markets were more subdued. Frankfurt edged up 0.6 percent despite weaker-than-expected German business sentiment, while London finished slightly lower and Paris slipped 0.3 percent. In Asia, Hong Kong closed 2.0 percent higher, while Tokyo was shut for a public holiday.

US stocks have repeatedly hit record highs in 2025, driven by strong enthusiasm for AI, looser Fed policy, and a belief that President Donald Trump’s tariffs have had less economic impact than feared. Still, recent weeks have seen rising anxiety that heavy investment in tech may be overextended, prompting warnings of a potential market correction.