Behind the five consecutive gains in the US stock market: impressive economic data, easing expectations of Federal Reserve rate cuts, and US Treasury yields stabilizing above 4%

Economic Performance Surpasses Expectations Supporting Stock Market Rebound

The US Q3 real GDP grew at an annualized rate of 4.3%, the fastest in nearly two years, laying the foundation for a broad rally in US stocks this week. Strong economic data send positive signals, boosting investor confidence in corporate earnings prospects, although government shutdown risks could still lead to downward revisions of subsequent data.

Initial jobless claims this week fell to 214,000, below the forecast of 223,500, but this figure masks the actual difficulties in the labor market. Continuing claims increased by 38,000 to 1.923 million, reflecting a stalemate situation of “hiring freezes and layoffs on hold.” The December unemployment rate may remain high, aligning with consumer pessimism about employment prospects.

Moderate Gains in Indices, Tech Stocks Lead Year-End Rally

Light trading before Christmas, US stocks closed 3 hours early. The S&P 500 and Dow Jones Industrial Average both hit new all-time closing highs, with the Dow up 0.6% and the S&P 500 up 0.32%, and the Nasdaq Composite up 0.22%. This marks the fifth positive day in US stocks this week.

The tech sector performed strongly, with Micron Technology up over 241% year-to-date, closing 3.77% higher this week; Western Digital and SanDisk led the storage chip sector with annual gains of 300% and 613%, respectively.

European markets faced correction pressure, with the UK FTSE 100 down 0.19% and France’s CAC 40 down 0.01%. Germany and Italy are closed for holidays.

Bond and Forex Markets Show Divergent Trends

The 10-year US Treasury yield fell to 4.13%, down 3 basis points from the previous trading day. Despite this, medium- and long-term bond yields remain steady, reflecting a softening market expectation for further Fed rate cuts. According to CME FedWatch data, market expectations for two rate cuts next year (each 25 basis points) are cautious, consistent with BlackRock’s view that the Fed is approaching a neutral rate level—limited room for cuts by 2026.

The US dollar index closed at 97.95, up 0.07%, remaining below 98.0 for consolidation. USD/JPY declined 0.18%, and EUR/USD fell 0.14%, reflecting relative stability of the dollar.

Commodities and Cryptocurrencies Both Retreat

Gold prices declined 0.13%, at $4,479.4 per ounce. WTI crude oil fell 0.12%, at $58.4 per barrel, with energy markets remaining weak.

Cryptocurrency markets showed clear divergence. Bitcoin rose 0.14% in 24 hours to $87,544, maintaining relative stability. Ethereum declined 0.57% to $2,945.7, with a more evident downward pressure.

Corporate Developments and New Regulations Reshape Industry Landscape

OpenAI is exploring embedding advertising within ChatGPT, with staff designing various ad presentation prototypes, aiming to create a new digital advertising model distinct from traditional social media.

In the chip sector, Micron’s recent quarterly performance recovery has driven stock strength, but collaboration progress between Intel and Nvidia faces setbacks. Nvidia recently paused testing of Intel’s 18A process, despite signing a chip development cooperation agreement, with launch timelines still unclear.

The EU’s new DAC8 regulation will take effect on January 1, 2026, requiring transparency in digital asset taxation across the entire EU. Crypto service providers must report user transaction details to tax authorities, with member states sharing data. Violators risk cross-border freezing or confiscation of crypto assets, profoundly changing the operational ecosystem of Europe’s crypto market.

Morgan Stanley analysts note that companies are passing on tariff costs through price increases, which showed initial effects in Q3, with plans to further raise prices by 2026. Coupled with the relatively stable 20-year bond yield, this pricing power shift will have a profound impact on inflation prospects next year.