Thin trading volumes threaten to amplify market swings as inflation data looms
Investor confidence in a December Fed interest rate reduction surged dramatically, with BNN Bloomberg reporting that traders placed an 85 percent probability on the move—up sharply from 71 percent just days earlier.
This shift in expectations fuelled Monday's rebound, signalling a critical turning point after weeks of market turbulence driven by questions over whether capital flooding into artificial intelligence has created unsustainable valuations.
The S&P 500 climbed 1.5 percent Monday, marking one of its strongest days since summer, according to BNN Bloomberg.
The Nasdaq composite jumped 2.7 percent—its best performance since May, CNBC reported—whilst the Dow Jones Industrial Average gained 0.4 percent.
Despite the rally, major indices remain under pressure for November, with the S&P 500 down roughly 2.7 percent since the month began.
A single sector drove the gains.
Alphabet surged 6.3 percent on investor optimism around its newest Gemini AI model, emerging as the dominant force lifting the broader market.
This concentration raises red flags.
SimCorp's Melissa Brown cautioned to CNBC that “when we have one stock that is leading the market higher,” it signals “we're not looking necessarily at a broad-based improvement” and suggests gains lack staying power.
Yet the critical test arrives Tuesday.
As per BNN Bloomberg, the US government will release producer price index data for September.
Economists expect a 2.6 percent annual rise—matching August's rate.
A stronger-than-expected reading threatens December rate cut hopes.
BNN Bloomberg notes that some US Federal Reserve officials already oppose a December cut, citing inflation's stubborn resistance to falling below the central bank's 2 percent target.
Brown warned CNBC that lower trading volumes during the Thanksgiving week could amplify market swings.
She told the outlet that “when sentiment is so negative, bad news tends to get exaggerated,” meaning negative economic data releases could see outsized selling pressure.
Meanwhile, bond markets showed shifting expectations.
BNN Bloomberg reported the 10-year Treasury yield fell to 4.03 percent from 4.06 percent late Friday, reflecting investor pricing in for lower rates ahead.
