# Fed interest rate cut expectations pump, the three major US stock indices rise collectively

Today, the US stock market is quite interesting - the S&P 500 rose by 0.60%, the Dow Jones rose by 0.62%, and the Nasdaq 100 rose by 0.70%, all hitting new highs in nearly 1.5 weeks. What is the core driving force? Two words: chips.

ASML, Micron, Intel and other chip stocks surged dramatically (+2% to +4%), driving the overall market. But the real highlight is the **surge in the probability of a Fed rate cut**—the probability of a 25 basis point cut at the December 9-10 meeting jumped from 30% last week to 80%. The market is now just waiting for this move.

Where did this wave of optimism come from? Economic data gave it a boost:

- Initial jobless claims fell to a 7-month low of 216K (expected to rise to 225K)
- Capital goods orders rose 0.9% month-on-month (expected to rise only 0.3%)
- Mortgage loan applications have slightly rebounded.

Bond yields have fallen in response, while the 10-year U.S. Treasury yield has instead increased by 2.9 basis points to 4.025% (bonds typically weaken when stocks rise). In simple terms, the market is accommodating two differing expectations: first, the economy isn't as bad as feared, and second, the Fed has room to cut interest rates.

**Another highlight**: The Q3 earnings season is nearing its end, with 475 out of 500 companies having reported results. 83% of the companies beat expectations, making it the strongest quarter since 2021. Q3 profits increased by 14.6% quarter-over-quarter, doubling the expected growth rate of 7.2%.

There is a bit of divergence at the **individual stock level**: Autodesk(ADSK) rose over 7%, Urban Outfitters(URBN) rose over 12% (sales data exceeded expectations), and Robinhood(HOOD) rose over 6% following the acquisition of a prediction market exchange. However, there were also some outliers—Workday(WDAY) fell 8%, Zscaler(ZS) dropped 10%, and Nutanix(NTNX) plummeted 17% (both the earnings report and guidance were disappointing).

In simple terms: The story of the Fed lowering interest rates can no longer hold; the market is betting that there will be a cut in December. Whether it comes true still depends on the upcoming economic data.