US Stocks Rebound on Rate-Cut Hopes as Tech Volatility Eases

US equity markets staged a solid recovery on Tuesday, extending Monday’s gains as investors priced in rising expectations of a Federal Reserve rate cut next month. Market sentiment was buoyed by comments from Fed officials signaling the potential for easing, prompting traders to assign more than an 80% probability to a quarter-point reduction in December.

The Dow Jones Industrial Average surged over 1.2%, while the S&P 500 climbed 0.7%. The Nasdaq Composite, which experienced early pressure, stabilized and finished up around 0.4%, led by gains among large technology companies. Despite broader tech strength, Nvidia shares fell by as much as 6.5% after reports suggested Meta may invest billions in Google’s AI chips, raising concerns over Nvidia’s market dominance in artificial intelligence.

Investor confidence was further reinforced by mixed-but-stable economic data. September retail sales came in below expectations, while producer prices rose 0.3% month-over-month, matching forecasts and rebounding from the previous month’s decline. Year-over-year, the producer price index increased to 2.7%, indicating moderate inflationary pressures. Analysts noted that the combination of potential Fed rate cuts, solid corporate earnings, and ongoing AI innovation could support continued equity market gains into 2026.

Across the Atlantic, London’s stock market also benefited from positive sentiment. The FTSE 100 rose 0.8% to 9,609.53, the FTSE 250 gained 1.0% to 21,617.41, and the AIM All-Share index advanced 0.7% to 742.09. Banking stocks led the rally after reports suggested that new sector-specific taxes are unlikely. Lloyds climbed 3.8%, NatWest increased 3.7%, and Barclays rose 2.4%.

In company-specific movements, Beazley fell 9.2% after earmarking $500 million for a Bermuda platform, while Kingfisher surged 6.0% following an upward revision in profit guidance to £540–570 million. AO World edged up 1.5% as its guidance reached the top of the projected range, and Baltic Classifieds declined 2.2% following a downgrade.

Overall, the market rebound reflects growing optimism among investors that a more accommodative monetary policy, combined with resilient corporate earnings and technological innovation, could sustain risk appetite and support continued growth in global equity markets.