Another rally for Alphabet leads the US stock market higher

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NEW YORK (AP) — The U.S. stock market is rising again on Monday, ahead of a week with shortened trading because of the Thanksgiving holiday.

The S&P 500 climbed 1.6% and added to its jump from Friday. The Dow Jones Industrial Average was up 310 points, or 0.7%, as of 1:57 p.m. Eastern time, and the Nasdaq composite was 2.6% higher.

Stocks got a lift from rising hopes that the Federal Reserve will cut its main interest rate again at its next meeting in December, a move that could boost the economy and investment prices.

The market also benefited from strength for stocks caught up in the artificial-intelligence frenzy. Alphabet, which has been getting praise for its newest Gemini AI model, rallied 5.5% and was one of the strongest forces lifting the S&P 500. Nvidia rose 1.8%.

But Monday’s gains were hesitant, and the S&P 500 rallied to a gain of 1% only to halve it within the first 15 minutes of trading, before picking up momentum again.

Stocks have been swinging sharply, not just day to day but also hour to hour, in recent weeks as worries weigh about what the Fed will do with interest rates and whether too much money is pouring into AI and creating a bubble. All the uncertainty is creating the biggest test for investors since an April sell-off, when President Donald Trump shocked the world with his “Liberation Day” tariffs.

Still, despite all the recent fear, the S&P 500 remains within 2.7% of its record set last month.

“It’s reasonable to expect that stocks will experience periods of pressure from time to time, which, historically, is quite healthy for longer-term strength,” Anthony Saglimbene, Ameriprise chief market strategist, wrote in a note to investors.

Wall Street will likely remain shaky in the near term because of concerns about AI investments, the Fed and some consumer uncertainty, he wrote. But strong corporate earnings, continued AI innovation and holiday season spending will “set the stage” for good conditions to close the year.

Several more tests lie ahead this week for the market, though none loom quite as large as last week’s profit report from Nvidia or the delayed jobs report from the U.S. government for September.

One of the biggest tests will arrive Tuesday, when the U.S. government will deliver data showing how bad inflation was at the wholesale level in September.

Economists expect it to show a 2.6% rise from a year earlier, the same inflation rate as August. A higher-than-expected reading could deter the Fed from cutting its main interest rate in December for a third time this year, because lower rates can worsen inflation. Some Fed officials have already argued against a December cut in part because inflation has stubbornly remained above their 2% target.

Traders are nevertheless betting on a 79% probability that the Fed will cut rates next month, up from 71% on Friday and from less than a coin flip’s chance a week ago, according to data from CME Group.