Market Overview: Fed Rate Cut Expectations & Tech Sector Leadership

The market is pricing in a high probability (~73-85%) of a December Federal Reserve rate cut, with mega-cap tech stocks (led by Alphabet, near a $4T market cap) driving recent gains. Contrary to claims of euphoria, the CNN Fear & Greed Index is at an extreme fear level (6/100), indicating investors are not overly optimistic. The rally ignores geopolitical noise and potential dollar strength, raising concerns of a sharp reversal if the Fed fails to deliver on rate cuts.

• NASDAQ Composite
  : Rose for four consecutive sessions (Nov21–Nov26), with gains of +1.73% (Nov24), +0.98% (Nov25), and +0.22% (Nov26) [0].
• S&P 500
  : Up +1.03% (Nov24), +1.03% (Nov25), and +0.28% (Nov26) [0].
• Dow Jones
  : Surge of +1.36% (Nov25) and +0.49% (Nov26) [0].

• Alphabet (GOOGL)
  : Market cap of $3.86T (close to $4T milestone) [0].
• AI Chipmakers
  : Broadcom (AVGO) +11.1%, Micron (MU) +8%, AMD +5.5% (AI-related gains) [4]; Nvidia (NVDA) dropped due to competition fears from Alphabet’s custom chips [5].

• CNN Fear & Greed Index
  : Plunged to 6 (extreme fear), contradicting claims of euphoria [3].

1. Fed Rate Cut Expectations
   : CME FedWatch now shows a 73-85% chance of a December 25bps cut, up from 39% a week prior, driven by dovish comments from NY Fed President John Williams [1,2].
2. AI as a Macro Hedge
   : Investors use AI stocks as a hedge against macro uncertainty, with chipmakers leading gains [4].
3. Tech Leadership
   : Mega-cap tech stocks (Alphabet, etc.) dominate the rally, with Alphabet nearing $4T market cap [0,5].

• Top Gainers
  : Broadcom (AVGO) +11.1%, Micron (MU) +8%, AMD +5.5% (AI chipmakers) [4].
• Top Losers
  : Nvidia (NVDA) (down due to Alphabet’s custom chip competition) [5].
• Alphabet (GOOGL)
  : Nears $4T market cap, a key indicator of tech leadership [0].

1. Fed Meeting
   : The Dec10 FOMC meeting is critical—any deviation from rate cut expectations could trigger a tech sell-off [1,2].
2. AI Competition
   : Alphabet’s push into custom AI chips may disrupt Nvidia’s dominance, affecting AI stock performance [5].
3. Sentiment Watch
   : Extreme fear (Fear & Greed Index 6) suggests room for further rally if the Fed cuts, but a no-cut scenario could lead to a sharp reversal [3].