Traders now see a roughly 70% chance that the Fed will cut its main lending rate by 25 basis points in December, up from a near 37% chance seen earlier in the day, according to the CME FedWatch Tool.
“The big tailwind today is that shift in rate cut odds for the December Fed meeting,” said Ross Mayfield, investment strategist at Baird in Louisville, Kentucky.
According to preliminary data, the S&P 500 gained 64.89 points, or 0.99%, to end at 6,603.65 points, while the Nasdaq Composite gained 192.83 points, or 0.87%, to 22,273.08. The Dow Jones Industrial Average rose 505.03 points, or 1.08%, to 46,257.29.
Stocks have been volatile in the past two sessions, reflecting heightened investor anxiety over sky-high valuations in the technology sector and over what may happen at the December Fed meeting.
Boston Fed President Susan Collins said on CNBC that policy was “in the right place,” indicating skepticism about the need for another rate cut. Her stance contrasts with dovish signals from some peers, a divergence that could stoke market volatility ahead of the December meeting. Global brokerages remained divided over the likelihood of a December rate cut after Thursday’s release of the long-delayed September jobs report, which marks the last employment reading before the Fed’s verdict next month. Eli Lilly shares ended higher after the company became the first drugmaker to touch a $1 trillion market capitalization. Alphabet shares closed sharply higher as well on Friday.
