Stocks Extend Thanksgiving Week Rally as Rate-Cut Bets Strengthen; VIX Sinks

Everything is expensive and it's getting worse! 👇

U.S. stocks climbed Wednesday, extending a holiday-week rally as expectations of rate cuts strengthened and investors embraced growing expectations that the Federal Reserve will begin cutting rates in December. Major indexes rose broadly while volatility sank, aided by a Federal Reserve Beige Book that portrayed an economy losing steam but not faltering.

The Dow Jones Industrial Average added 314.67 points, finishing at 47,427.1, a 0.67% gain. The S&P 500 rose 0.69% to 6,812.61, while the Nasdaq Composite advanced 0.82% to 23,214.7. Small caps outperformed, with the Russell 2000 up 0.89% to 247.32.

The latest Beige Book, released Wednesday, described nationwide economic activity as “little changed,” even as rising tariff-driven input costs continued to pressure corporate margins, according to the Federal Reserve. Businesses across multiple districts reported that while materials, imported goods, and industrial components have become more expensive, many firms are still absorbing those increases rather than passing them on to consumers. The report warned that margins could compress further if tariffs persist into 2026.

Labor conditions also showed signs of easing. Hiring freezes, slowing wage growth, and the growing role of artificial intelligence in replacing entry-level roles were common themes across districts. Skilled workers remain in short supply, but rising health insurance premiums are adding new pressures to labor costs.

Bond markets have reacted decisively: traders now price an 85% probability of a December rate cut and an 88% likelihood of another move in January, according to the Beige Book summary. That dynamic bolstered equities and pushed volatility sharply lower. The CBOE Volatility Index slid 8.35% to 17.01, one of its steepest drops this month.

Commodities also participated in the upbeat tone. Gold ticked up 0.53% to $4,199.40, while crude oil gained 1.23% to $58.66, despite ongoing concerns in the Beige Book that weak energy prices had been restraining investment in parts of the sector. Bitcoin surged nearly 3% to $89,723.27, extending its November momentum.

Outside macroeconomic developments, corporate payment systems drew fresh attention after Visa’s new Commercial Enhanced Data Program (CEDP) triggered unexpectedly steep fee increases for some merchants who previously relied on fabricated data fields to secure lower interchange rates. “Everybody is concerned about those credit card processing fees. Nobody likes to pay them,” said Jeremy Layton, CEO and founder of Verisave, in an interview with AInvest. One client, he noted, paid “over $300,000 more in processing fees in the second half of October alone,” rising to more than $500,000 in November.

Visa’s new data rules are blindsiding businesses with massive fees. 👇

The Beige Book’s overall tone, stable but weakening, cost pressures rising but not yet hitting consumers, offered investors a Goldilocks scenario heading into year-end. With inflation softening and growth cooling at the edges, markets continued to price the Fed’s coming easing cycle as a supportive backdrop for risk assets.