S&P 500 Rises 1.7% as Rate-Cut Bets Fuel Rally

The S&P 500 rose 1.7% during the Thanksgiving holiday week, closing at 6,849.09 on Friday, 28 November 2025 according to Seeking Alpha. The index's gains were largely attributed to growing expectations that the U.S. Federal Reserve will cut the Federal Funds Rate at its next meeting. As of 28 November, the CME Group's FedWatch tool indicated an 87% probability of a quarter-point rate cut in December 2025 according to Seeking Alpha.

Kevin Hassett, National Economic Council Director, recently expressed confidence that a rate cut is likely and supported by the Fed's recent communications according to Investing.com. The growing anticipation of a rate cut has fueled investor optimism, leading to significant market gains. This sentiment is expected to continue as the Fed moves closer to its decision date.

Commerzbank's outlook was upgraded to positive by S&P Global Ratings due to the bank's progress toward its 2028 financial targets according to Investing.com. This development added to the positive momentum in European markets and further supported global equity gains. The bank's improved return on tangible equity and lower risk provisioning guidance have been well-received by investors and analysts alike.

Market Reactions and Investor Sentiment

The expectation of a rate cut has already influenced investor behavior, with the S&P 500 staying well within the red zone forecast range outlined in recent market analyses according to Seeking Alpha. Analysts highlight the role of AI-related investments in driving the index's performance, reinforcing the market's confidence in future growth according to Seeking Alpha.

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Fiserv executives have also demonstrated their optimism by purchasing significant amounts of company stock following a period of poor performance according to Barrons. These insider transactions are seen as a bullish sign and have contributed to a 5.9% increase in the company's stock price. However, Fiserv remains one of the worst-performing stocks in the S&P 500 for 2025 according to Barrons.

Policy Developments and Market Outlook

President Donald Trump has announced that he has decided on a nominee for the next Federal Reserve Chair but will not reveal the name until a formal announcement before Christmas according to FXStreet. Speculation is growing that Kevin Hassett could be the chosen candidate, as he has been vocal in his support for rate cuts and has aligned with Trump's economic priorities according to Investing.com. This potential shift in leadership raises questions about the future direction of Fed policy and its impact on the broader economy.

Investors are closely monitoring the December FOMC meeting and are pricing in over an 85% chance of a 0.25% rate cut according to Investing.com. Expectations of additional cuts in 2026 are also influencing market sentiment and contributing to a positive outlook for equities. Analysts believe that the combination of rate cuts and seasonal trends could lead to a strong finish for the S&P 500 in 2025 according to Investing.com.

Risks to the Outlook

Despite the positive momentum, there are risks to the current market outlook. Economic uncertainty and geopolitical tensions remain key factors that could influence the Fed's decision according to Morningstar. The recent pullback in British and Dutch government support for TotalEnergies' Mozambique LNG project highlights the impact of geopolitical risks on commodity markets according to Morningstar. Such developments could have a ripple effect on global equity markets if they lead to broader economic instability.

The energy and commodity markets have also seen significant price movements in November. Copper prices reached record highs before retreating slightly, influenced by supply disruptions and demand uncertainties according to Seeking Alpha. Precious metals, including gold and silver, experienced volatility amid interest rate fluctuations and currency movements. While lower interest rates have historically supported gold prices, market participants are waiting for further confirmation of economic weakness to drive prices higher according to Seeking Alpha.

What This Means for Investors

Investors are increasingly focusing on the implications of the Fed's policy decisions for their portfolios. With a high probability of a rate cut, there is a growing interest in S&P 500 stocks that are well-positioned to benefit from a bullish market environment according to Investing.com. Analysts are recommending stocks that are undervalued and show strong financial health, based on fundamental metrics and positive analyst sentiment according to Investing.com.

The launch of new financial products, such as the GraniteShares 2x Long GOOGL Daily ETF, also reflects the appetite for leveraged exposure to the market according to GlobeNewswire. This ETF is designed to provide investors with a leveraged return on the performance of GOOGL, allowing for increased exposure to the stock's movements. However, the risks associated with leveraged investing are significant, and such products are suitable only for knowledgeable investors according to GlobeNewswire.