Analysis of Fed Daly’s December Rate Cut Support and Market Reactions

On November 24, 2025, a Reddit discussion focused on Fed Daly’s surprise support for a December rate cut, driven by concerns over a fragile labor market and lower inflation risks [Event Input]. The Wall Street Journal confirmed Daly’s shift in stance, highlighting ongoing divisions within the FOMC [1]. Market expectations surged, with the CME FedWatch tool indicating an 81% probability of a December rate cut [2]. The NASDAQ (^IXIC) closed up 1.73% the same day, reflecting a tech rebound amid rising rate cut bets [0]. Reddit users debated potential outcomes: a dominant argument (score 17) suggested rate cuts would boost AI investments rather than create jobs, while others warned of an AI bubble propped until rates hit zero or saw buying opportunities from possible panic sell-offs.

The NASDAQ’s 1.73% gain underscores the tech sector’s sensitivity to rate expectations—lower rates reduce borrowing costs, potentially increasing AI and tech investment [0]. Daly’s support adds complexity to FOMC dynamics, which previously had mixed signals about rate adjustments [1]. The CME FedWatch 81% probability reflects strong market pricing of the rate cut, yet user concerns about an AI bubble highlight lingering skepticism about tech valuation sustainability [2].

Risks include potential AI bubble formation if rate cuts artificially inflate tech valuations without corresponding fundamental growth [Event Input]. The fragile labor market cited by Daly also raises concerns about broader economic slowdown [1]. Opportunities may arise if panic sell-offs occur due to labor market worries, allowing investors to acquire assets at discounted prices [Event Input].

On November 24, 2025, Fed Daly backed a December rate cut, with the CME FedWatch tool showing an 81% probability of the move. The NASDAQ closed up 1.73% amid a tech rebound and rate cut bets. Reddit users debated impacts on AI investments, bubble risks, and buying opportunities. This report provides objective market context and analysis without prescriptive recommendations.