Wall Street's AI Rally Hits Peak: Here's What Just Happened

Monday closed green across the board—Nasdaq crushed it with a 2.7% jump, S&P 500 up 1.6%, Dow Jones +0.4%. This was the Nasdaq’s best day since May 12, and the playbook was simple: AI stocks went brrr, and the Fed just signaled another rate cut is coming in December.

The AI Momentum Play

Alphabet dropped Gemini 3 on Nov 18—their upgraded AI model that needs less user prompting. Stock popped 6.3% on the news. But here’s the real story: the chipmakers are the ones winning. Broadcom surged 11.1%, Micron jumped 8%, AMD climbed 5.5%. These companies power the AI infrastructure everyone’s building, and Wall Street is finally noticing.

Tech sector as a whole? +2.4%. Utilities +1.1%. Even Consumer Discretionary got in on the action at +1.3%. Only Consumer Staples stumbled (-1.2%).

The Fed’s December Wild Card

San Francisco Fed President Mary Daly said she’s backing a 25-basis-point rate cut in December. New York Fed President John Williams? Same tune—expects another 0.25% cut coming. The reasoning: labor market is weakening faster than inflation concerns. CME FedWatch now shows 81% probability of that cut happening Dec 9-10, up from just 42.2% last week.

Current benchmark rate is sitting at 3.75-4%. If the cut goes through, that’s three cuts of 0.25% each in 2025.

The Numbers That Matter

• VIX dropped 12.4% to 20.52 (fear gauge cooling off)
• NYSE advancers beat decliners 2.3-to-1
• Nasdaq advancing issues 2.16-to-1
• 18.32B shares traded (slightly below 20-session average)

Bottom line: Market’s pricing in both rate relief AND continued AI strength. The question is whether this momentum holds or if we’re seeing a classic relief rally into year-end.