Global Markets Rally on Fed Rate Cut Hopes and Tech Gains

November 27, 2025 at 07:13 UTC

5 min read

Global stock market rally visualization with tech sector gains and Fed rate cut optimism

Key Points

Global equity markets, including U.S., European, and Asia-Pacific, have rallied for four consecutive days, driven by expectations of a Federal Reserve interest rate cut in December.
Technology stocks, particularly in the semiconductor and AI sectors, led gains with companies like Nvidia, Broadcom, and Dell showing strong performance and raised forecasts.
The Federal Reserve’s Beige Book indicated subdued economic activity with cooling consumer spending and muted hiring, reinforcing market expectations for easier monetary policy.
Goldman Sachs highlights investment opportunities beyond mega-cap tech, recommending small caps, healthcare, and international stocks as the market rally broadens.

Global Market Rally Fueled by Fed Rate Cut Expectations

Global equity markets have experienced a sustained rally, marking four consecutive days of gains as investors increasingly price in a Federal Reserve interest rate cut at the December 9-10 meeting. U.S. stock indexes such as the S&P 500, Dow Jones Industrial Average, and Nasdaq Composite rose by approximately 0.7% to 0.8% on November 26, 2025, with the Russell 2000 small-cap index advancing 0.8%. This rally has been supported by dovish comments from Federal Reserve officials and a sharp repricing of Fed policy, with the probability of a 25 basis point cut in December rising to around 85%, up from about 30% a week prior. The market optimism is further bolstered by reports that Kevin Hassett, the White House National Economic Council Director, is the leading candidate for the next Fed Chair, a choice perceived as aligned with President Donald Trump’s preference for lower rates. Asian markets followed Wall Street’s lead, with Japan’s Nikkei 225 gaining 1%, Hong Kong’s Hang Seng index rising 0.4%, and South Korea’s Kospi increasing 0.7%. European markets opened mixed but generally positive, with Germany’s DAX up 0.2% and France’s CAC 40 up 0.1%. The global market momentum reflects investor confidence in a more accommodative monetary policy stance amid signs of economic moderation.

Technology Sector Drives Market Gains Amid AI Momentum

Technology stocks have been at the forefront of the recent market rally, particularly those involved in artificial intelligence (AI) and semiconductors. Leading companies such as Nvidia, Broadcom, Microsoft, and Dell Technologies posted solid gains, with Nvidia rising about 1.4% and Dell climbing nearly 6% after raising its 2026 revenue forecast to $112.2 billion, surpassing consensus estimates. Broadcom’s shares outperformed the semiconductor industry, fueled by growth in AI semiconductors and successful integration of VMware, with expectations for a 66% year-over-year increase in AI revenues for fiscal Q4 2025. The semiconductor sector saw broad strength, with companies like Marvell Technology, ASML Holding, AMD, and Micron Technology gaining between 2% and 5%. Despite some recent volatility and concerns about an AI bubble, retail investors, particularly in Hong Kong, continue to show strong demand for U.S. tech stocks, including AI infrastructure firms. However, some software companies such as Zscaler and Nutanix experienced declines after issuing cautious revenue forecasts. The technology sector’s leadership in the rally underscores the market’s focus on AI-driven innovation and the potential for sustained growth in this area.

Federal Reserve Beige Book Highlights Economic Moderation and Labor Market Challenges

The Federal Reserve’s Beige Book, released on November 26, 2025, provided an anecdotal assessment of the U.S. economy, indicating that overall economic activity was little changed since the previous report. Consumer spending declined further, with higher-end retail remaining resilient, while manufacturing activity showed modest increases despite tariff-related headwinds. Labor markets showed signs of cooling, with employment declining slightly and many employers implementing hiring freezes, replacement-only hiring, and adjusting hours worked rather than increasing headcount. Some firms noted that artificial intelligence has replaced entry-level positions or improved worker productivity, reducing the need for new hires. Wage growth was modest overall, with some sectors experiencing moderate wage pressure due to tighter labor supply. Input cost pressures, largely from tariffs, were widespread, leading to margin compression for some firms. Inflationary pressures persisted but with mixed plans for near-term price increases. The Beige Book’s findings of subdued consumer spending and muted hiring support market expectations for a Federal Reserve rate cut in December to sustain economic growth.

Broader Market Opportunities Beyond Mega-Cap Tech Highlighted by Goldman Sachs

While the recent market rally has been led by mega-cap technology stocks, Goldman Sachs Asset Management emphasizes the broadening of the rally into other sectors and market segments. Greg Calnon, co-head of public investing at Goldman Sachs Asset Management, identified small-cap stocks, healthcare, and international equities as promising areas for investors in 2026. Small-cap companies are positioned to benefit from the AI boom by competing in niche markets and currently offer attractive valuations relative to large-cap stocks. The Russell 2000 index has gained 11.3% year-to-date, reflecting this trend. Healthcare stocks have also started to benefit from AI-related advancements, with the iShares US Healthcare ETF up 14.5% year-to-date, driven by AI applications in the sector. International stocks have outperformed U.S. equities this year, with the Vanguard Total International Stock Index Fund ETF rising 26.8%, and Goldman Sachs projects that international equities will outperform U.S. stocks over the next decade. This diversification strategy aims to capture the broadening market rally and mitigate concentration risks associated with the technology sector.

Key Takeaways

Investor optimism for a Federal Reserve interest rate cut in December has driven a global equity rally across U.S., European, and Asia-Pacific markets.
Technology and semiconductor stocks, especially those linked to AI, have led market gains, supported by strong earnings and raised forecasts.
The Federal Reserve’s Beige Book reveals subdued economic activity and labor market softness, reinforcing expectations for easier monetary policy.
Goldman Sachs recommends diversifying into small caps, healthcare, and international stocks to capture the broadening market rally beyond mega-cap tech.