By Alex Financials

Markets Catch Their Breath — Rebound After a Rough Start

After a shaky opening to December, U.S. stock markets rebounded on Tuesday. Futures suggested a firm start: prior to the bell, futures tied to the Dow Jones Industrial Average, S&P 500 and Nasdaq Composite were up modestly. Once regular trading started, major indexes posted mild gains.

By midday, the S&P 500 was on track for its sixth advance in seven sessions, with the Nasdaq outperforming as technology names led the rebound.

The rebound was supported by stabilization in bond yields, a rebound in cryptocurrencies, and renewed optimism that the Federal Reserve may cut interest rates soon.

Tech Leads; Select Stocks See Big Moves

Technology stocks and riskier assets saw some of the biggest gains today. For example:

• MongoDB soared — shares popped following a solid quarterly report.

• Similarly, some previously beaten-down crypto-related and speculative stocks bounced back on renewed crypto strength.

Among major tech and growth names, there was renewed buyer interest — as part of a broader tentative rotation back into growth-oriented equities.

That said, some large-cap names remain under pressure, as investor caution — particularly around high valuations — persists.

Rate Expectations, Bonds and Macro Backdrop Drive Sentiment

A key driver behind today’s optimism is growing confidence that the Fed may cut interest rates soon. Markets now view a rate cut as increasingly likely in the near term.

At the same time, yields on U.S. Treasuries — which exert influence over borrowing costs and valuations — have stabilized, removing some of the drag that weighed on equities earlier this week.

That said, the macroeconomic backdrop remains uncertain. According to the Organisation for Economic Co‑operation and Development (OECD), global economic growth may slow in 2026, weighed down by tariffs, inflation, and trade disruptions. That “soft-landing” path tempers exuberance somewhat, even in today’s rally.

The Bigger Picture: Is the Rally Sustainable?

Some analysts are urging caution. While markets have shown resilience — helped by strong consumer spending and hopes for easier monetary policy — lingering risks remain. Inflation remains above target, economic growth may decelerate globally, and some sectors may be overvalued, especially those tied to speculative growth or AI-driven narratives.

On the other hand, many tech and communications firms are forecast to generate robust operating cash flow in the next couple of years, possibly outpacing their capital expenditures. That could provide a buffer against macro headwinds.

How sustainable this rebound will be likely depends on upcoming pivotal events — such as the Fed’s next move, inflation data, and corporate earnings — which will shape sentiment and market direction into year-end.

What to Watch Next

• The upcoming inflation data and economic reports — which may influence the Fed’s next policy decision.

• Whether rate-cut expectations solidify or fade based on macroeconomic signals.

• Performance of earnings announcements in tech and growth sectors, especially among companies with high valuations.

• Sentiment around speculative assets (cryptos, high-growth / high-risk stocks) — whether today’s rebound becomes a durable trend or a short-lived bounce.