After closely monitoring the market developments on Investing.com today, it is clear that the global financial markets are navigating through a phase of cautious optimism, underpinned by moderating inflation pressures and the growing probability of rate cuts next year. The Nasdaq and S&P 500 extended their recent gains, with tech stocks leading the rally as investors increasingly price in a more dovish stance from the Federal Reserve in 2025. Bond yields have declined in parallel, further supporting equity valuations and risk appetite.
One prominent driver is the U.S. Core PCE numbers, which came in slightly cooler than expected, reinforcing expectations that inflation is continuing to moderate. This has strengthened market conviction that the Fed is done with rate hikes and will likely begin cutting rates by mid-2025. As of today, the CME FedWatch Tool suggests a near 75% probability of at least one rate cut by June 2025. The recent dovish sentiment from several Fed officials, including Governor Waller’s remarks emphasizing the need not to “overdo” monetary tightening, has only fueled this narrative further.
From a sectoral perspective, tech and AI-related stocks are showing renewed momentum. Companies like Nvidia and Microsoft gained more than 2% intraday, with sentiment driven by ongoing enthusiasm around advancements in large language models and AI integration into enterprise systems. The semiconductor segment has also benefited from robust expectations for global chip demand in 2025, especially with emerging markets increasing infrastructure investment. This rotation back into tech suggests a renewed willingness among investors to embrace growth, particularly in an environment of potential monetary easing.
On the commodities side, oil prices remain under pressure. WTI and Brent both traded lower today, largely due to the latest inventory data showing larger-than-expected builds coupled with waning winter demand. Furthermore, geopolitical tensions in the Middle East haven’t translated into sustainable risk premiums, suggesting markets are discounting immediate supply concerns. The U.S. dollar index (DXY) has retraced some gains due to falling Treasury yields, giving further support to risk assets, especially in emerging markets.
European indices, meanwhile, are catching up to Wall Street’s year-end rally. The DAX hit record highs earlier this week and remains supported by optimism that the ECB may also pivot towards easing in Q2 2025. Signs of slowing inflation and tepid economic activity in the eurozone strengthen the case for a coordinated global policy shift. This type of synchronized pivot generally augurs well for equities and commodities and suggests a broader macro tailwind heading into the new year.
While risks remain — notably from China’s continued property market weakness and looming elections in the U.S. and Europe — the prevailing sentiment today is cautiously bullish. Investors appear positioned for a soft landing scenario, where inflation continues to fall, central banks loosen policy, and growth stabilizes without triggering a recession.