Global Markets Rally on Fed Rate Cut Hopes

Global stocks rose for a second session amid expectations of a Federal Reserve rate cut in December, easing concerns over high AI valuations. Stocks had slumped due to pessimism about interest rate cuts and the economic impact of a U.S. government shutdown, but comments from Fed officials buoyed markets.

Global stocks surged for a second consecutive session on Monday, driven by mounting anticipation of a December rate cut by the U.S. Federal Reserve. This development helped assuage investor fears over previously stretched valuations in the AI sector while easing longer-dated U.S. Treasury yields.

The previous week saw stocks experience their most significant weekly percentage drop since early August, amid market pessimism concerning potential interest rate cuts, prolonged fears about a U.S. government shutdown, and concerns regarding high AI-related valuations. However, comments from New York Fed President John Williams about potential rate reductions helped boost investor confidence.

In early trading on Wall Street, U.S. stocks rallied, led by the communication services sector as Alphabet shares saw a significant uptick. Meanwhile, the yield on benchmark U.S. 10-year Treasury notes dipped slightly, reflecting market optimism about possible intervention to support economic stability.

(With inputs from agencies.)