Fed Rate Cut Bets Drive Stock Market Gains and Crypto Rebound, Why Bitcoin Is Surging Back Toward $93,000 Right Now
- US stock futures are rising as traders bet that weak economic data will guarantee a Federal Reserve rate cut next week.
- Marvell Technology has agreed to acquire Celestial AI for $3.25 billion to boost its photonics capabilities for the AI market.
- Bitcoin has rebounded above $93,000 and oil prices are surging due to failed peace talks between the US and Russia.
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| Image From Bloomberg |
The financial markets are showing signs of renewed optimism as traders double down on the belief that the Federal Reserve is about to ease its grip on the economy. US stock futures are signaling a second consecutive day of gains. This positive momentum is largely driven by expectations that upcoming economic data will force the central bank to cut interest rates next week. The S&P 500 contracts have nudged higher by about 0.2 percent. Investors are shaking off the gloom from November and looking ahead to a potential policy shift that could fuel growth through 2026.
Data is the current kingmaker in this environment. The market is anxiously awaiting the private sector payroll report from ADP Research. This specific release has taken on outsized importance because official government data has been delayed. Traders are also eyeing the ISM service sector report for clues about economic health. Justin Onuekwusi is the chief investment officer at St. James’s Place and he noted that sentiment remains fragile without a clear runway of official statistics. The consensus is that a weak jobs report will seal the deal for a rate cut.
The cryptocurrency sector is joining the rally after a brutal period of losses. Bitcoin has rebounded and pushed above $93,000 to reach a two week high. This recovery comes after a massive downturn that wiped out over $1 trillion in value across the digital asset space. The revival of crypto prices is helping to lift sentiment for risky assets across the board. Tech stocks and crypto linked equities are finding fresh support as risk appetite returns to the market.
Corporate news is also driving the narrative. Marvell Technology is stepping into the spotlight with a massive strategic acquisition. The chipmaker has confirmed a $3.25 billion deal to buy semiconductor startup Celestial AI. This move is designed to expand Marvell's computing capacity to meet the insatiable demand created by the artificial intelligence boom. The deal gives Marvell access to photonics technology which uses light instead of electricity to connect chips. It is a long term play with revenue contributions expected to hit the books in fiscal year 2028.
Politics is playing a subtle but significant role in market positioning. Money markets are now pricing in four rate cuts by the end of next year. This aggression is partly fueled by rumors that President Donald Trump may select Kevin Hassett to replace Jerome Powell as Fed Chair. Hassett is viewed as a dove who would favor easier money policies to stimulate growth. Bond traders are already positioning themselves for a regime change that prioritizes lower rates over strict inflation control.
The oil market remains volatile and sensitive to geopolitical friction. Crude prices surged after peace talks between Russia and the United States regarding Ukraine failed to produce an immediate breakthrough. Brent futures climbed 1.2 percent while West Texas Intermediate rose 1.4 percent. The lack of a deal keeps the threat of supply disruptions alive. However rising US inventories are acting as a cap on gains and reminding traders that a crude surplus still looms in the background.
Analysts remain cautiously optimistic about the medium term outlook for equities. While the forecast for 2025 is generally positive there are warnings of choppy waters ahead. Stretched valuations and a heavy reliance on the tech sector pose risks. Linh Tran is a market analyst at XS.com and she suggests that while the trajectory is upward investors should brace for significant corrections along the way. The market is banking on a "soft landing" scenario where inflation cools without crashing the economy.