Stock market today: S&P 500 rides Alphabet surge to end higher as AI rally resumes

Investing.com --The S&P 500 closed sharply higher Monday, underpinned by renewed investor appetite for AI stocks following a recent wobble just as investor bets on a December rate cut continue to recover. 

At 4:00 p.m. ET (20:00 GMT), the Dow Jones Industrial Average rose 202 points, or 1.5%, the S&P 500 index gained 1.4%, and the NASDAQ Composite climbed 2.7%. 

U.S. stock indices have struggled in November, with the broad-based S&P 500 currently on track to drop 3.5% this month. The tech-heavy NASDAQ Composite is down 6.1% for the month, while the blue chip Dow Jones Industrial Average is off 2.8% month-to-date.

Alphabet leads tech revival as AI stocks attempt comeback

Alphabet Inc Class A (NASDAQ:GOOGL) rose more than 6% amid optimism that its AI model Gemini, which announced a major update last week, is closing the gap on arch rival OpenAI. 

In a leaked memo, OpenAI CEO Sam Altman reportedly admitted that Google’s recent success could "create some temporary economic headwinds for our company."

Other AI-related stocks including NVIDIA Corporation (NASDAQ:NVDA) and Oracle Corporation (NYSE:ORCL) were also in the green.

December rate cut bets rebound;’ Trump accepts Xi invite 

Sentiment on rate cuts have improved after New York Fed President John Williams on Friday called for a rate cut in December, contrasting more cautious comments from other Fed officials and presenting a split outlook among Fed members on the December decision. 

This view was matched by Federal Reserve Governor Christopher Waller, who said Monday he is advocating for an interest rate cut at the December meeting, citing little change in economic data since the last Fed meeting.

Bets on a December interest rate cut have since rebounded sharply in recent sessions, with the probability of a 25-basis-point rate cut jumping to around 69% from about 44% a week earlier, according to the CME FedWatch Tool.

A host of long-delayed economic readings are due this week, and will offer some cues on the health of the U.S. economy and thus the Fed decision. 

Producer inflation, retail sales, and industrial production prints for September are due on Tuesday, while third-quarter gross domestic product data is due on Wednesday. 

Any signs of a cooling labor market and economic growth are likely to further the case for more easing by the Fed. 

But the central bank is still seen flying semi-blind into the December meeting, with the important November payrolls report, which will also include some of the delayed October release, not due until after the last meeting of the year. 

On the geopolitics front, President Trump said he had accepted an invitation to meet with Chinese President Xi Jingping in April following a " very good call."

Trump reciprocated by extending an invitation for Xi to the U.S. later in the year.

The update stoked investor expectations that the meetings could pave the way to deescalate trade tensions between two of the world’s largest economies.    

Agilent leads off holiday-shortened week

On the earnings calendar, investors will be keeping tabs on an ebbing stream of quarterly reports this week, although Thursday’s Thanksgiving holiday will limit activity.

Life sciences firm Agilent Technologies (NYSE:A) will highlight the agenda after the close Monday, with observers keen to see how the company is grappling with tepid order levels over the last two years. Still, there have been signs that demand for its tools and services needed to develop new medicines has stayed resilient.

Elsewhere, Novo Nordisk (NYSE:NVO) stock slumped after the Danish pharmaceutical company announced disappointing results from its Alzheimer’s disease clinical trials.

By contrast, rival Biogen (NASDAQ:BIIB) shares rose strongly, with analysts at Jefferies saying that biotech could benefit from Novo Nordisk’s trial failure as it removes an overhang for Biogen, softening the competitive landscape and potentially accelerating sales of Leqembi, Biogen’s antibeta Alzheimer’s treatment.

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Peter Nurse, Ambar Warrick contributed to this article