Stock Market Today: S&P 500 Rises 0.8% as Inflation Data Eases Rate-Hike Concerns
The S&P 500 gained 38.41 points to close at 4,732.15 today, advancing 0.8% on softening inflation expectations that rekindled hopes the Federal Reserve is done hiking rates. The Nasdaq-100 outperformed with a 1.2% jump to 15,847.33, while the Dow Jones Industrial Average posted a more modest 0.5% gain to 36,421.89. Market breadth turned positive—advancers outnumbered decliners 2,073 to 1,844 on the NYSE—signaling broadening conviction rather than narrow leadership.
The catalyst: This morning's University of Michigan Consumer Sentiment index showed inflation expectations falling to 2.9% for the next 12 months, the lowest level since March 2021. That single data point shifted the entire narrative. Treasury yields tumbled—the 10-year dropped 11 basis points to 3.94%—which unlocked a powerful rally in duration-sensitive sectors. Tech stocks surged as lower rates improve the present value of future earnings, while value and cyclical names stumbled on recession fears creeping back into the conversation.
The VIX closed at 16.4, down 2.1 points, showing volatility evaporating as traders rotated into growth. This is the first positive day for equities in four trading sessions, breaking a losing streak that wiped out 1.2% from the S&P 500.
Market Scoreboard
| Asset | Price | Change | % Change |
|---|---|---|---|
| S&P 500 | 4,732.15 | +38.41 | +0.82% |
| Nasdaq-100 | 15,847.33 | +189.12 | +1.21% |
| Dow Jones | 36,421.89 | +178.54 | +0.49% |
| 10-Year Treasury Yield | 3.94% | -11 bps | -0.28% |
| VIX Volatility Index | 16.4 | -2.1 | -11.37% |
| U.S. Dollar Index | 103.28 | -0.31 | -0.30% |
| Bitcoin | $42,845 | +$1,247 | +3.01% |
| Crude Oil (WTI) | $78.32/bbl | -$1.18 | -1.49% |
| Gold | $2,041.50/oz | +$18.75 | +0.93% |
Key takeaway: Lower yields and a weaker dollar are classic reflation trades. Precious metals rallied on rate-cut expectations, while oil sold off on recession concerns. Bitcoin's 3% pop reflects the risk-on sentiment shift.
Today's Top Movers
Top 5 Gainers
- NVIDIA (NVDA): +3.44% to $875.23 — AI chipmaker extended gains as lower rates reduce the discount rate on long-duration tech profits; beat estimates last month by 22% on EPS.
- Tesla (TSLA): +2.87% to $248.16 — EV leader benefited from sector-wide enthusiasm; announced new factory in Poland, adding to growth narrative.
- Meta Platforms (META): +2.91% to $314.42 — Social media giant rode the tech rally; analysts cite strong AI spending visibility through 2024.
- Broadcom (AVGO): +3.12% to $156.87 — Semiconductor supplier ripped higher on infrastructure and AI demand; beat guidance last quarter by 18%.
- Palantir Technologies (PLTR): +4.18% to $31.56 — Data analytics firm printed its highest close since February; analyst upgraded price target to $38.
Top 5 Losers
- Chevron (CVX): -2.34% to $146.89 — Oil giant tanked as WTI crude retreated 1.5% on recession fears overcoming OPEC output cuts.
- JPMorgan Chase (JPM): -1.87% to $178.45 — Bank sold off as net interest margin compression pressures accelerate with 10-year yields falling 11 bps.
- Berkshire Hathaway (BRK.B): -1.42% to $412.67 — Warren Buffett's conglomerate fell on financials weakness and lower equity valuations.
- Lockheed Martin (LMT): -1.56% to $423.12 — Defense contractor retreated despite geopolitical tensions; rotation out of value into growth weighed.
- Caterpillar (CAT): -1.78% to $287.34 — Industrials lagged as recession anxiety triggered profit-taking in cyclical names.
Sector Performance
The 11 GICS sectors posted a stark divide between growth and value today, with technology and discretionary charging higher while financials and energy retreated.
| Sector | Daily Return | YTD Return |
|---|---|---|
| Technology | +1.58% | +32.14% |
| Consumer Discretionary | +1.23% | +18.67% |
| Communication Services | +1.04% | +24.89% |
| Industrials | -0.34% | +8.12% |
| Materials | -0.67% | +12.34% |
| Utilities | +0.12% | -3.45% |
| Consumer Staples | +0.28% | +6.78% |
| Real Estate | -0.98% | -7.23% |
| Healthcare | +0.56% | +14.56% |
| Financials | -1.42% | +2.34% |
| Energy | -1.89% | +3.21% |
Sector Rotation Analysis
Today marked a classic "risk-on" rotation into duration assets. Technology's 1.58% gain was the day's best performer—the largest single-day outperformance of Tech vs. Financials since June 2023. The 294 basis point spread between Tech and Energy reflects a seismic shift in market expectations: traders are pricing in a Fed pause by December with a 73% probability, down from 52% just three days ago.
Real estate and financials bore the brunt of the selloff. REITs dropped 0.98% as lower rates reduce the yield advantage these assets provide relative to treasuries. Banks lost 1.42% on margin compression—every 10 basis point drop in long-term yields costs large banks roughly $800M in annual net interest income cumulatively.
Energy's 1.89% loss is worth parsing. It's not a demand destruction story yet—recession probability in the S&P 500 futures market is just 28%, up from 18% a week ago. Rather, it's a narrative shift. When inflation fears ease, the "safety" premium embedded in crude oil evaporates. Watch for energy stabilization if the Fed ultimately does pause; defensive plays don't hold value in a hiking cycle pause without demand recovery.
What's on Tap Tomorrow
Economic Calendar
- 8:30 AM ET: Initial Jobless Claims — Expected 212K vs. prior 210K. The labor market is the Fed's last hurdle before a pause. Expect volatility if this prints above 240K.
- 10:00 AM ET: Conference Board Consumer Confidence — Expected 108.2 vs. prior 106.1. This index leads consumption by one month; a beat would validate today's rally narrative.
- 2:00 PM ET: Fed Chair Jerome Powell speaks — At the Economic Club of New York. This is a high-profile venue. Any hawkish rhetoric could reverse today's gains quickly.
Earnings Reports
Before the open: Walmart (WMT), Home Depot (HD), Lowe's (LOW), Costco (COST)
After the close: Amazon (AMZN), McDonald's (MCD)
Retail earnings carry outsized weight tomorrow. If Walmart and Costco print weak guidance on consumer spending, the recession narrative takes hold and today's gains evaporate. The options market is pricing a 4.2% move in WMT and a 5.1% move in AMZN for tomorrow.
Key Catalysts to Watch
Powell's speech at 2 PM is the highest-impact event. The market is now pricing a 73% odds of a Fed pause at the December meeting—that's a massive shift from three weeks ago. If Powell sounds even slightly more optimistic on inflation, equities rip higher. If he signals more hikes are coming, we see a violent reversal and potential test of yesterday's lows at 4,691.
Frequently Asked Questions
Why did the stock market rally today?
The University of Michigan Consumer Sentiment survey released this morning showed inflation expectations falling to 2.9%, the lowest since March 2021. That single data point convinced the market the Fed's rate-hike cycle is over, sparking a 11 basis point drop in 10-year Treasury yields and a broad rally in growth stocks.
Which sectors benefited most today?
Technology surged 1.58% and Consumer Discretionary gained 1.23% as lower yields boost the present value of long-duration earnings. Conversely, Financials lost 1.42% (net interest margin compression) and Energy fell 1.89% (lower crude on recession fears).
What should I watch tomorrow?
Three things: (1) Jobless claims at 8:30 AM—any print above 240K could trigger recession fears; (2) Powell's speech at 2 PM—this is your market driver; (3) Retail earnings (Walmart, Costco, Amazon) for consumer health signals. Options markets expect 4-5% single-stock moves.
Is the Fed actually done raising rates?
The market is now 73% confident the Fed will pause by December, up from 52% three days ago. But Powell hasn't explicitly said this yet. Watch his language tomorrow carefully. If he sounds confident inflation is contained, it's a green light. If he sounds cautious, today's rally is at risk.
Why did gold and Bitcoin rally if the economy is getting stronger?
Both rallied on expectations of lower rates, not economic strength. Gold gained 0.93% and Bitcoin surged 3% because falling Treasury yields reduce the opportunity cost of holding non-yielding assets. If growth stocks keep rising, these could reverse quickly.
The Bottom Line
Today's 0.8% rally in the S&P 500 was driven by a single data point—moderating inflation expectations—that shifted the entire Fed narrative from "more hikes coming" to "pause is likely." The breadth was healthy (2:1 advancer/decliner ratio), but the outperformance of duration-sensitive tech stocks and the selloff in value/financials tells you this is a "hopes of lower rates" move, not a "recovery" move.
Tomorrow is pivotal. If Powell sounds dovish and retail earnings are solid, the S&P 500 could break above the 4,750 resistance level. If either disappoints, expect a whipsaw back toward yesterday's lows at 4,691. The options market is pricing 2-3% single-day moves on retail names, and volatility should pick up heading into the Fed's December meeting.
Next major catalyst: December FOMC meeting on December 19. That's your market deadline. Everything between now and then is noise until Powell and crew officially signal the hiking cycle is complete.