The S&P 500 extended its rebound on Tuesday, November 25, 2025, closing higher for a third straight session as investors doubled down on bets that the Federal Reserve will cut interest rates again in December.
The benchmark U.S. equity index finished at 6,765.88, up 60.76 points or 0.9%. [1] The move leaves the S&P 500 less than 2% below its all-time closing high, reinforcing a narrative that markets are leaning heavily on the prospect of easier monetary policy. [2]
The Dow Jones Industrial Average jumped 664.18 points (1.4%) to 47,112.45, while the Nasdaq Composite added 153.59 points (0.7%) to close at 23,025.59. [3] Small caps stole the spotlight: the Russell 2000 surged 2.1% to 2,465.98, underscoring a broadening rally beyond mega-cap tech. [4]
How the S&P 500 Performed Today
- Close: 6,765.88
- Point change: +60.76
- Percentage change: +0.91% [5]
Today’s gain builds on Monday’s powerful advance, when the S&P 500 jumped about 1.55% and tech shares ripped higher on renewed enthusiasm for artificial intelligence and dovish Fed rhetoric. [6]
Across the last few sessions:
- This week so far: S&P 500 up about 2.5%; Nasdaq up 3.4%; Dow up 1.9%; Russell 2000 up 4.1%. [7]
- Year-to-date: S&P 500 up roughly 15%, Nasdaq nearly 19%, Dow around 10.7%, and Russell 2000 about 10.6%. [8]
In other words: today wasn’t a one-off bounce. It’s the continuation of a broader, rate-cut-fueled grind higher that has pushed U.S. equities back toward record territory.
Why Stocks Rallied: Data Supports a December Fed Rate Cut
The rally’s backbone was a fresh batch of economic data that, while hardly sparkling, strengthened the case for another Fed rate cut at the December 10 meeting.
Three key reports hit the tape — all delayed by a 43‑day government shutdown, which means the data itself is from September, but markets still cared about the direction of travel: [9]
- Retail sales: Up 0.2% in September, weaker than the 0.4% gain economists expected, pointing to cooling consumer spending. [10]
- Producer Price Index (PPI): Headline wholesale inflation rose 0.3%, roughly in line with forecasts, but an underlying core measure came in slightly cooler. [11]
- Consumer confidence (Conference Board): Confidence fell more than anticipated in November, with short‑term expectations tumbling nearly 12%, a sign of growing caution heading into the holiday season. [12]
Put together, the numbers sketched a picture of softening demand and moderating inflation — exactly the mix that encourages a central bank that has already cut rates twice this year to consider one more move. [13]
According to futures pricing referenced in both AP and Reuters coverage, traders now see roughly 83–85% odds of a 25‑basis‑point cut in December, up from about a 50/50 chance just a week ago. [14]
In the bond market, that optimism showed up as lower yields: the 10‑year U.S. Treasury yield slipped to around 4.00%, breaking below the 4% threshold for the first time since late October and down from 4.04% late Monday. [15] Lower yields mechanically boost the present value of future cash flows, which supports higher equity valuations — especially for long‑duration assets like growth and tech stocks.
Alphabet’s AI Momentum vs. Chipmaker Pain
Beneath the index-level calm, the AI trade stayed noisy.
- Alphabet (Google parent) extended its winning streak, rising about 1.5% today after a multi-day surge driven by enthusiasm over its Gemini AI model and a broader rebound in mega-cap tech. [16]
- Over the last two sessions, Alphabet shares have climbed more than 10%, pushing its market capitalization to roughly $3.82 trillion and drawing headlines about a possible march toward a $4 trillion valuation. [17]
But the AI glow wasn’t shared evenly:
- A report suggesting Meta Platforms is exploring spending billions of dollars on AI chips from Alphabet rather than traditional suppliers slammed parts of the semiconductor space. [18]
- Nvidia and Advanced Micro Devices (AMD) both dropped sharply intraday and still finished the session with sizeable losses — roughly mid‑single‑digit declines between the midday and closing snapshots. [19]
- The Philadelphia Semiconductor Index ended lower on the day, even as the broader market climbed. [20]
The message: AI remains a powerful driver for the S&P 500, but leadership is rotating within the theme — from chip suppliers to platform companies and hyperscalers that increasingly look ready to bring more of the AI stack in house.
Retailers Roar on Earnings — Despite Soft Sales Data
One of the day’s most striking stories lived inside the consumer and retail space.
Even as September retail sales missed expectations, several major retailers crushed earnings estimates, suggesting that execution and brand strength still matter enormously in a slowing macro environment. [21]
Among the standouts: [22]
- Abercrombie & Fitch skyrocketed more than 30%+ after delivering a much stronger profit than expected and nudging up its full‑year guidance.
- Kohl’s exploded higher — around 40%+ at various points — after posting a surprise profit where analysts had penciled in a loss.
- Best Buy gained roughly 5%, helped by better‑than‑forecast earnings and upbeat commentary on demand for computing, gaming, and mobile electronics.
- Dick’s Sporting Goods staged a comeback, reversing an early drop tied to weaker Foot Locker–related results and finishing slightly positive.
These moves contributed to a 2.2% rise in the S&P 500 retail sub‑index, according to Reuters, helping offset weakness in some tech names. [23]
The contrast is stark: headline retail data implies a cautious consumer, but company‑level numbers show that well‑positioned brands with strong execution can still flourish — a nuance that matters for stock pickers inside a macro-driven market.
Small Caps, Sectors, and Market Breadth
One of the more encouraging developments for bulls was the broadening of the rally:
- The Russell 2000 small‑cap index jumped 2.1% to 2,465.98, outpacing the S&P 500 and signaling that investors are willing to move beyond the safety of mega‑caps. [24]
- AP’s midday and closing reports noted that roughly four out of five S&P 500 stocks were higher at various points, illustrating stronger market breadth than during many of 2025’s ultra‑narrow, mega‑cap‑driven rallies. [25]
By sector, Reuters reporting showed: [26]
- Health care led gains among the S&P 500’s 11 sectors.
- Utilities lagged, a typical pattern on days when growth and risk appetite are in the driver’s seat.
Easier borrowing conditions tend to help smaller, more leveraged companies disproportionately, which helps explain why small caps led the market on a day when rate‑cut hopes were doing most of the heavy lifting. [27]
Bonds, Dollar and Global Markets
The move in equities didn’t happen in isolation:
- The 10‑year Treasury yield slipped to about 4.00%, breaking below 4% for the first time in nearly a month and reinforcing the notion that markets are repricing the path of interest rates lower. [28]
- The U.S. dollar index weakened to just under 100, while the euro and sterling both firmed modestly against the greenback. [29]
- In commodities, oil prices edged lower, with U.S. crude around the high‑$50s and Brent in the low‑$60s per barrel amid broader macro and geopolitical headlines. [30]
Globally, major indices in Europe and Asia ended higher, with Germany’s DAX up around 1% and China’s Shanghai Composite rising close to 0.9% — a supportive backdrop for U.S. risk assets. [31]
How Close Is the S&P 500 to New Highs?
Given today’s close, the S&P 500 now sits within roughly 1.8% of its all-time high, according to AP’s tally, after a strong October and a volatile but ultimately positive November. [32]
Strategists have spent much of the autumn pushing targets higher. One widely cited call from Deutsche Bank recently suggested the S&P 500 could reach 8,000 by the end of 2026, reflecting confidence that earnings growth and falling rates will continue to support valuations. [33]
That said, today’s rally is built on a delicate balance:
- Growth is slowing, but not collapsing.
- Inflation is cooling, but not yet “mission accomplished.”
- The Fed is easing, but not aggressively — and officials have been clear that further cuts depend on incoming data. [34]
If that balance shifts — for example, if incoming inflation figures re‑accelerate or consumer data deteriorates more sharply — the market’s current optimism on rate cuts could be tested quickly.
What Today’s Move Means for Investors and Market Narrative
From a market‑structure point of view, today’s S&P 500 action does three important things:
- Confirms the breakout attempt: Back‑to‑back gains of 1.55% and 0.9% put distance between the index and its recent pullback lows, reinforcing the idea that the latest correction may be behind us. [35]
- Broadens participation: Small caps, health care and retail joined the party, reducing concerns that only a handful of AI‑adjacent mega‑caps are holding up the index. [36]
- Deepens reliance on Fed policy: The rally is increasingly tethered to the assumption of a December rate cut. Futures markets are pricing in that outcome with high confidence, which leaves equities sensitive to any surprise in Fed communication or upcoming data releases. [37]
In short: the S&P 500 today traded like a market that believes the Fed has its back, earnings are “good enough,” and AI plus lower rates can keep the bull story alive. Whether that remains true will depend heavily on the path of inflation, the resilience of the consumer, and what the Fed actually delivers on December 10.
References
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