U.S. equities extended their winning streak on Wednesday (Aug. 26), notching a fourth consecutive gain as AI stocks rebounded and expectations of a December Federal Reserve rate cut fueled risk appetite. The Dow Jones Industrial Average rose 314.67 points to 47,427.12, while the S&P 500 added 0.69% and the Nasdaq Composite gained 0.82%.
Fed Rate Cut Bets Rise
Market sentiment was buoyed by dovish signals from Fed officials, weak September retail sales, and a jump in jobless claims, all pointing to softer consumer momentum. According to CME FedWatch, traders now assign an 80% probability to a 25 basis point cut at the Fed’s Dec. 9–10 meeting, up from 40% last week.
The Fed’s Beige Book showed little change in overall activity, with spending by low- and middle-income households tightening, while high-income consumers remained resilient. Inflation data will be closely watched, with the delayed September PCE index set for release on Dec. 5.
Political Backdrop
Treasury Secretary Scott Bessant said interviews for a new Fed chair are nearing completion, with President Donald Trump expected to announce a nominee before Christmas. White House advisor Kevin Hassett is seen as a leading candidate, sharing Trump’s view that rates remain too high under current Chair Jerome Powell.
Sector and Stock Moves
Defensive and tech stocks led Wednesday’s rally, while healthcare and communication services lagged.
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Semiconductors: The Philadelphia Semiconductor Index jumped 2.76%. AMD surged 3.93%, Broadcom rose 3.26%, Nvidia gained 1.37%, and Micron climbed 2.55%.
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Big Tech (FANG+): Results were mixed. Microsoft rose 1.78%, Apple edged up 0.21%, while Alphabet fell 1.08%, Meta slipped 0.41%, and Amazon dipped 0.22%.
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Taiwan ADRs: TSMC rose 1.85%, ASE gained 1.55%, UMC added 0.83%, and Chunghwa Telecom rose 0.36%.
Corporate highlights included Oracle surging 4.05% after Deutsche Bank upgraded sentiment on its OpenAI partnership, and Dell jumping 5.83% on booming AI server orders. In contrast, HP fell 1.40% after weak guidance and job cut announcements, while John Deere dropped 5.67% on profit margin concerns. Urban Outfitters soared 13.54% after record quarterly sales.
Analyst Views
Clark Bellin of Bellwether Wealth said bargain hunting is helping stabilize markets, noting the recent correction was only about 4% from October highs—well below the typical 10% threshold. Thomas Martin of Globalt Investments added that the pullback was driven more by emotional selling than fundamentals, suggesting room for a rebound before year-end.
The Bottom Line
With AI stocks rebounding and Fed rate cut bets climbing, U.S. equities are showing resilience ahead of Thanksgiving. While analysts caution that clear catalysts remain limited, bargain hunters appear willing to step in, keeping the market’s recovery narrative alive.