Stocks rise but face mixed results for month

AI bubble fears and divide over Fed rate cut weigh on investors

Traders faced a whirlwind month as central bankers on the Federal Reserve struggle with whether to cut interest rates. Reuters

Wall Street’s major indexes rose slightly during a shortened trading session on Friday, leading to mixed results for November.

Friday’s session, which closed at 1pm ET due to the Thanksgiving holiday in the US, marked the final day of trading for a month that saw a retreat among tech stocks amid growing concern and talk of an artificial intelligence bubble.

The tech-heavy Nasdaq Composite closed 0.65 per cent higher on Friday, but was nearly 2 per cent lower for the month. The Dow Jones Industrial Average eked out a win for November after finishing the day 0.61 per cent – or 289 points – higher.

Meanwhile the S&P 500 gained 0.54 per cent on the day, also gaining on the month.

AI concerns

Among the stocks facing the most volatility during the month was chipmaker bellwether Nvidia. The company, whose powerful AI chips are at the centre of the AI investment boom, beat earnings forecasts earlier this month.

Nvidia reported that it expects fiscal fourth-quarter sales of $65 billion, beating analysts estimates and indicating that demand remains strong for the company's AI accelerators.

“The AI ecosystem is scaling fast, with more new foundation model makers, more AI start-ups, across more industries and in more countries. AI is going everywhere, doing everything, all at once,” Nvidia chief executive Jensen Huang said during the company's earnings call.

But the earnings were not enough to ease concerns over AI valuations, with Nvidia stock down about 12 per cent on the month at $176.70 per share.

Fed rate cut divide

Traders also faced a whirlwind of a month as central bankers on the Federal Reserve continue to grapple with whether to cut interest rates for a third consecutive time, at next month's meeting.

New York Fed President John C Williams led the rate-cut cavalry in remarks last week.

Mr Williams said he sees “room for a further adjustment in the near term”, which investors took to mean that a December rate cut is on the table.

About 87 per cent of traders anticipate the Fed will lower the target for the federal funds rates by an additional 25 basis points to 3.50 per cent-3.75 per cent next month, data from CME Group showed.

Meanwhile, Fed governor Christopher Waller also voiced his support for a December rate cut, citing labour market weakness.

The remarks from the two influential Fed officials went against hawkish sentiment among the bank's regional Fed presidents, who showed more hesitancy towards further policy reductions, citing inflationary concerns.

Unlike most other central banks, the Federal Reserve has a dual mandate of tackling inflation and unemployment.

The Fed's rate-setting committee comprises 12 voting members: the seven-member board of governors, the New York Fed president and four regional Fed presidents who serve rotating terms. Seven additional Fed officials participate in a non-voting capacity.

Jerome Powell, who as Federal Reserve chairman is tasked with steering the committee's rate decisions, has not offered any clues yet on his stance for next month's meeting. Investors were expected to closely monitor his remarks in California on Monday for any further guidance.

Other markets mostly up

In Europe, major indices closed higher. London's FTSE 100 added 0.3 per cent, with investor confidence buoyed by the tax-heavy UK budget.

Paris's CAC 40 rose 0.3 per cent, while Frankfurt's DAX also grew 0.3 per cent.

Earlier, in Asia, stock markets closed out a strong week on hopes that the Fed will cut interest rates again in December.

Tokyo's Nikkei 225 was up 0.2 per cent at the close and the Shanghai Composite added 0.3 per cent. Hong Kong's Hang Seng, however, retreated 0.3 per cent.

In commodities, oil prices closed lower on Friday for a weekly gain but still posted a fourth straight monthly decline amid stalled peace talks between Russia and Ukraine and before a key Opec+ meeting on Sunday.

Brent retreated 0.78 per cent to settle at $62.38 a barrel. West Texas Intermediate shed 0.17 per cent to $58.55 a barrel.

Gold, meanwhile, jumped on the expectations of the Fed hike. The precious metal, considered a safe-haven asset, added 1.5 per cent to reach $4,219.23 an ounce.