US stocks bounced hard on Monday as Thanksgiving week kicked off, with the Nasdaq surging 2.6% and the S&P 500 climbing 1.5% by midday.
The rally was driven by three converging forces: renewed Fed rate-cut optimism now priced at roughly 75–80% for December, Amazon bombshell $50 billion government AI infrastructure bet, and a tentative rebound in beaten-down crypto after last week’s bloodbath.
Bitcoin stabilized near $87,000 after plummeting to $81,000 on Friday, while mega-cap tech titans Nvidia, Alphabet, and Tesla led the charge higher.
The shift signals investor appetite returning to high-beta AI plays after November’s brutal selloff.
The Fed dial swings back toward easing
Fed rate-cut odds staged a dramatic turnaround Monday after a torrid week of policy uncertainty.
December rate-cut futures rallied to a 75–80% probability, up from lows of just 27–44% hit mid-week, following dovish signals from Fed officials John Williams and Christopher Waller over the weekend.
Williams specifically flagged that current rates remain “restrictive,” signaling room for further cuts toward neutral policy.
Waller went further, saying he’s advocating for a December cut due to labor-market concerns and would then take a meeting-by-meeting approach starting January.
The decision is scheduled for December 9–10, but markets have priced in a 25-basis-point reduction to a base case of 3.50%-3.75 %.
The catch: delayed economic data (September jobs report finally released Thursday, October CPI withheld due to the government shutdown) continues to muddy the FOMC’s calculus.
Policymakers remain split, some focus on labor weakness, others fret inflation risks, but investor conviction in a cut has snapped back after last week’s equity bloodbath.
The 10-year Treasury yield fell 1 basis point to 4.05%, providing breathing room for equities.
This is classic reversal psychology: one week ago, Fed hawkishness crushed tech stocks. This week, dovish bets rescue them.
Amazon’s $50B bet reignites tech animal spirits
Amazon’s Monday announcement to deploy up to $50 billion for US government AI and high-performance computing infrastructure unleashed a powerful risk-on impulse across equities.
The commitment adds 1.3 gigawatts of computing capacity via new federal data centers, with construction beginning in 2026.
AWS CEO Matt Garman framed it as “removing technology barriers” for agencies on cybersecurity, drug discovery, and workforce efficiency.
The timing was surgical. Just as investors worried AI capex spending wasn’t driving profitability, Amazon pivoted hard into government, where multi-year contracts provide revenue certainty.
The AWS GovCloud angle matters because it’s highly regulated, lower-risk, and insulated from consumer spending shocks.
Semiconductor stocks surged on the news: Broadcom, Advanced Micro Devices, and Micron all posted double-digit gains as traders repriced AI as a structural thesis instead of a bubble.
Alphabet gained 5.7% partly on the announcement of a NATO Cloud deal, while Tesla jumped 4.4% on Trump’s social media post about a “very good” call with China’s Xi Jinping and plans to meet in Beijing in April.
Geopolitics plus AI spending equals a recipe for mega-cap ascendancy.
Bitcoin stabilized near $87,000 after Friday’s panic, though exchange-traded fund outflows remain severe, $3.5 billion has flowed out since October, putting Bitcoin ETFs on track for their worst month since inception nearly two years ago.
Holiday liquidity is razor-thin heading into Thanksgiving, suggesting range-bound chop ahead.
The message: Fed easing plus government AI spending equals risk-on. For now, the narrative has flipped from “AI bubble” to “AI is structural.” Investors are buying that story again.
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