The Fragile Rally: Is the Market Running on Hope, or Something More Concrete?
The air on Monday, November 24, 2025, felt different heading into the shortened Thanksgiving week. Not just the crisp autumn chill, but a distinct hum of anticipation, almost palpable even through the digital screens flashing green across trading floors. US stock futures climbed, with the Dow Jones Industrial Average futures (YM=F) pushing up approximately 0.27% to 0.38% (a gain of about 124 points), S&P 500 futures (ES=F) advancing by around 0.52% to 0.68%, and Nasdaq 100 futures (NQ=F) leading the charge with a climb of about 0.75% to 0.94% Dow futures rise over 100 points as market attempts rebound into the holiday week: Live updates - CNBC. You could practically hear the collective sigh of relief from investors eager for a rebound after a bruising November Stock market today: Dow, S&P 500, Nasdaq futures rise, sparking hopes of rebound from November losses - Yahoo Finance. But what exactly is fueling this sudden surge of optimism? My analysis suggests it's less about undeniable data and more about a potent cocktail of speculative hope and carefully managed expectations.
The Fed's Whisper and the Market's Roar
A significant portion of this Monday morning lift undoubtedly came from New York Federal Reserve President John Williams. His remarks, suggesting a December interest rate cut remains a possibility, struck a chord. Williams noted that policy is "modestly restrictive" (a carefully chosen phrase that implies room to loosen) and sees "room for a further adjustment" to move closer to neutral. The market, ever-eager for a dovish signal, latched onto this. Futures markets now assign almost a 70% probability—to be more exact, a 69.8% chance of a quarter-point Fed rate cut at its December 10 meeting. That’s a substantial leap from the approximately 44% probability we saw just a week prior.
This rapid shift in sentiment, however, raises a crucial question: What changed so dramatically in a week to warrant such a swing? The answer, or lack thereof, is where things get interesting. We’re still waiting on key economic data like September/October producer prices and retail sales, due out Tuesday, and jobless claims on Wednesday. These are the numbers that should theoretically underpin such a significant shift in rate cut expectations. Yet, the biggest piece of the puzzle, the Consumer Price Index (CPI), is conspicuously absent. The Bureau of Labor Statistics scrapped October’s CPI release entirely, and November’s report (originally slated for December 10) has been pushed to December 18—conveniently after the Fed’s policy meeting. I’ve spent years tracking the rhythm of these releases, and this particular shuffle of the CPI report feels less like a logistical hiccup and more like a strategic maneuver, leaving the market to operate on a significant data void just when it needs clarity most.
AI's Uneven Ride and Gold's Retreat
Beyond the Fed's influence, Alibaba's main AI app, Qwen, provided another jolt of positive news. Drawing over 10 million downloads in the week after its relaunch, it sent shares of Alibaba (BABA) climbing over 3.52% in premarket trading and more than 5% in Hong Kong. This is a clear echo of the AI-driven market rally we saw earlier this year, a reminder of the sector's explosive potential. However, it’s also an outlier in what has been a rather sobering month for AI stocks. Major indexes have suffered notable losses in November, largely due to investors "reassessing lofty valuations" across AI-aligned companies. The S&P 500 dropped 2% last week, bringing its November decline to about 3.5%. The Nasdaq Composite slid 2.7% last week and is down over 6% for the month. Even the Dow fell almost 2% last week, off nearly 3% for November. This suggests that while individual AI successes can provide a temporary boost, the broader market is still grappling with the sustainability of those valuations.
In this environment of rate cut anticipation, gold (GC=F) prices have predictably slipped, trading near $4,040 an ounce. Investors, eyeing a potential December rate cut, are pulling back from safe-haven assets. This makes sense on paper. Yet, it's worth remembering gold has been in a consolidation phase since surging to a record high above $4,380 an ounce on October 20, and it's still up around 55% this year. That kind of enduring strength, fueled by geopolitical uncertainty and fiscal outlook concerns, isn't easily dismissed. The market’s current surge feels less like a sustained climb and more like a sugar rush before the real data hangover sets in. As Mark Malek, CIO at Siebert Financial, aptly put it, "Investors hate noise. They crave certainty, and the market simply cannot deliver that right now." Charu Chanana, chief investment strategist at Saxo Markets, echoed this sentiment, stating, "Looks like the market badly needs a rate cut." The market's need for a rate cut, however, doesn't automatically translate into a justified one, especially when critical data is on hiatus. This whole situation feels like we're watching a high-stakes poker game where the dealer keeps withholding crucial cards, yet the players are still betting big on a royal flush.
Betting on a Ghost
The current market enthusiasm, driven by the seductive possibility of a December rate cut and a few bright spots in AI, is built on a foundation that feels distinctly wobbly. With critical inflation data conveniently pushed past the Fed's decision-making window, investors are essentially placing their bets on incomplete information, guided more by hope than hard numbers. This isn't a solid rally; it's a speculative gamble.