MW Stocks stage powerful comeback ahead of Thanksgiving. It wasn't enough to erase November's losses.

By Vivien Lou Chen

Gains for some AI-related names and rising expectations for a December Fed rate cut have helped to give the market a boost

U.S. stocks were on track as of Wednesday to tally their best Thanksgiving-week gains in at least 13 years.

U.S. stocks rallied for a fourth straight day on Wednesday, having clawed back all of last week's losses ahead of the Thanksgiving holiday.

Gains made by Alphabet Inc. $(GOOG)$ $(GOOGL)$ and Broadcom Inc. $(AVGO)$ since last Friday have helped breathe new life into the AI trade, while growing expectations for Federal Reserve interest-rate cuts bolstered rate-sensitive small caps and other corners of the market. The Dow Jones Industrial Average DJIA and S&P 500 SPX each finished up by almost 0.7% on Wednesday, bringing their week-to-date advances to 2.6% and 3.2%, respectively. With an abbreviated trading session still ahead for Friday, both indexes were on track for their strongest Thanksgiving-week performances since 2012, based on preliminary data from Dow Jones Market Data. The Nasdaq Composite COMP ended 0.8% higher on Wednesday, bringing its week-to-date gain to 4.2%. That leaves the index on track for its best Thanksgiving-week performance since 2008, when it rose 10.9%.The market's latest gains came after the S&P 500 finished above its 50-day moving average on Tuesday and Wednesday in an encouraging sign that the near-term trend is likely to be higher. However, this week's powerful comeback was not enough to offset overall losses so far for the month of November. The S&P 500 was still off 0.4% for the month as of Wednesday's close, while the Nasdaq Composite was off by almost 2.2%. Read: November's stock-market pullback could be a speed bump. Or possibly a hint of something worse to come.

"People are trying to get positioned for the remainder of the year and next year for what may be a pretty positive environment," said Carol Schleif, the Minneapolis-based chief market strategist for BMO Private Wealth. "When you look at what markets powered through this year, we just came through an incredibly strong third-quarter earnings season, companies paid a lot of attention to margins, and valuations are actually lower than they were at the beginning of the year, particularly for tech companies."So this week's stock-market moves seem to reflect "natural positioning for another positive year in 2026," helped by the broadening of the artificial-intelligence trade to include players like Alphabet and Broadcom. "It's reassuring, at the margins, to growth and tech investors that you are seeing more broad-based participation," she said.Meanwhile, expectations for the Fed's next quarter-point rate cut in December jumped to 85% on Tuesday and Wednesday, up from 30.1% just a week ago. Expectations shifted after New York Fed President John Williams indicated last Friday that there's scope to cut interest rates in the near term. Fed governor Christopher Waller followed on Monday by making the case for a December rate cut."A Fed speaker a day keeps the downturn away," said portfolio manager Brian Mulberry of Chicago-based Zacks Investment Management. "What you are finding now is that the market is breathing a sigh of relief that the December rate cut is back on the table in a big way," Mulberry said via phone. But it's not the 25-basis-point size of the cut that matters as much as the prospect that "we're in a long-term easing cycle that could stretch into 2026," he said. "And as confidence in that easing cycle returns, it becomes more of a risk-on trading sentiment."

The U.S. equity market will be closed on Thursday in honor of Thanksgiving. It will reopen on Friday for an abbreviated session that ends at 1 p.m. Eastern.

-Vivien Lou Chen

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November 26, 2025 16:29 ET (21:29 GMT)

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