US stock indexes all closed higher yesterday, specifically the S&P 500, Nasdaq 100, Dow, and Russell 2000. Meanwhile, the volatility and fear index (VIX) fell for the second consecutive session by nearly 27%, from around 28 points on Friday to about 20.50 points yesterday, indicating investor relief and renewed appetite for US equities.
Expectations point to continued positive momentum in US stocks in the coming period, despite elevated valuations, driven by several key factors:
- The financial results of most US companies exceeded analysts’ expectations, especially major technology companies linked to artificial intelligence, or the so-called “Magnificent 7,” particularly Nvidia, which reported higher-than-expected revenues and earnings with optimistic forward guidance. Nvidia’s CEO, Jensen Huang, stated that sales of “Blackwell” chips are “out of control,” indicating extremely strong demand. Additionally, research by the Trump administration suggested the possibility of allowing Nvidia to export H200 chips to China. Alphabet’s stock also hit a record high, rising more than 6% yesterday and up 68% year-to-date, outperforming other “Magnificent 7” stocks, especially with the strength of its Gemini 3 AI model. Tesla’s stock rose about 7% after CEO Elon Musk announced the company is close to completing the latest A15 AI chip and has begun work on A16, significantly supporting US stock indexes.
- Positive momentum continued in major AI-linked technology stocks, with the “Magnificent 7” index up more than 3% yesterday and about 20% year-to-date. The Philadelphia Semiconductor Index (SOX) rose about 5% yesterday and nearly 35% since the beginning of the year, reflecting strong demand for AI-related products and large investment flows into the sector’s infrastructure.
- Market bets on a 25-basis-point Fed rate cut at the December 10 meeting increased to 80%, up from less than 30% last week, providing additional positive momentum for stocks.
- The banking sector also performed well, with the KBW Bank Index up about 1% yesterday, marking a second consecutive gain and about 17% year-to-date.
- The industrial sector rose by 0.25% yesterday, with XLI ETF tracking industrial stocks up more than 14% from the start of the year.
From a technical perspective, indicators suggest a continued uptrend for the Nasdaq 100, as the 20-, 50-, and 200-day moving averages remain aligned, with the 20-day above the 50-day and the 50-day above the 200-day, reflecting a positive technical setup. The next challenge will be whether the Nasdaq 100 can break above the 50-day moving average and then reach the 20-day moving average level.
Please note that this analysis is provided for informational purposes only and should not be considered as investment advice. All trading involves risk.
