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Investing.com -- U.S. stocks bounced back Friday after New York Federal Reserve President John Williams signaled that another rate cut could be on the table this year, offering a reprieve after a punishing week for equities.
The Dow Jones Industrial Average rose 493.15 points, or 1.08%, to 46,245.41. The S&P 500 gained 0.98% to 6,602.99, and the Nasdaq Composite added 0.88% to 22,273.08.
Williams said in prepared remarks that he sees policy as “modestly restrictive, although somewhat less so than before our recent actions.”
“I still see room for a further adjustment in the near term to the target range for the federal funds rate,” he added.
His comments suggested Fed leaders remain open to lowering rates again at the December meeting, prompting traders to sharply boost the odds of another cut. Fed funds futures now imply more than a 70% chance of a quarter-point move next month, up from under 40% a day earlier.
The stocks’ rebound, however, wasn’t enough to offset the broader weekly slide. All three major indexes fell around 2% for the period, with the Nasdaq down 2.7%, as Thursday’s sell-off left a deep mark.
Fresh economic data due after govt reopening
Despite Williams’s comments, strategists at JPMorgan expect the policymakers “to remain on hold at the December meeting due to limited new data, as October payrolls and November jobs report will be released after the event.”
“We now anticipate 25bp rate cuts in January and April, premised on further labour market loosening, followed by a pause for the rest of 2026 and a partial removal of the insurance cuts” in the first half of 2027, they added.
Attention now shifts to the American consumer as the holiday shopping season gets underway. Black Friday and Cyber Monday will offer an early pulse check at a time when sentiment has softened and several data releases remain delayed due to the recent government shutdown.
Some of those postponed reports are set to arrive in the coming weeks, including the Producer Price Index (PPI) and September retail sales on Tuesday.
The backlog could inject more volatility into markets as investors parse the incoming numbers for clues on economic momentum and the likelihood of a December 9–10 rate cut.
“Readings for the three months prior to September suggested solid consumer spending, with total sales for the June-August period seeing a 4.5% increase relative to the same period a year ago,” Macquarie economists led by Emily Manalang said in a note.
Aside from economic data, investors will also parse a handful of corporate results this week, including reports from MongoDB and Zoom Communications.
What analysts are saying about U.S. stocks
Morgan Stanley: "In line with our comments from late Sept., tensions around the Fed & liquidity have weighed on stocks. While these risks could persist in the short-term, we maintain conviction in our bullish 12M view. We like Discretionary Goods, Healthcare, Financials, Industrials and Small Caps into ’26."
BTIG: "Until SPX can reclaim Thursday’s reversal high (6770), we shouldn’t assume a final low has been made. Further, the 20 DMA (6763) and 50 DMA (6711) are likely to provide resistance on an initial reflex rally. In other words we expect some relief heading into month-end, but are reluctant to assume new highs are right around the corner. Should SPX lose 6500 at this point, we would be looking for a move towards 6200."
Citi: "Whether it’s navigating the AI theme or broader macro influences, our sense is that investor sentiment is best described as “exhausted” as we approach the holiday season. Post the recent drawdown, the S&P 500 is near our 6600 year-end base case, which we characterize as fair value. While earnings growth into 2026 looks strong, shifting expectations for terminal valuations are unfolding. The market is weighing the productivity promise of AI against its implications for labor and business models. The Magnificent 7 is becoming more idiosyncratic, a theme which we think persists into 2026."
JPMorgan: "With resilient global growth and sticky inflation, we continue to hold a medium-term constructive outlook on risk assets supported by the relentless expansion of AI. Crowding in High Beta stocks and valuations remain short-term concerns warranting investors holding downside protection, as the fragility of the labour market could materialize in the data before year end. Less support from Fed easing in 2026 should also result in a concentration of leadership in AI-heavy Quality Growth."