Markets regained poise on Tuesday as a tech and AI upswing drove global stocks higher and traders kept a strong bet that the Federal Reserve will lower U.S. interest rates next week. That matters now because Friday’s PCE inflation reading and the Fed’s Dec 9-10 meeting are immediate catalysts. In the short term markets will test whether recent optimism holds through incoming U.S. data. Over the longer term, record foreign private inflows into U.S. equities and steeper yield curves suggest structural forces reshaping asset allocation across the U.S., Europe, Asia and emerging markets. Overseas demand has accelerated to levels beyond the 2021 peak, so the next few weeks will show if that pace is sustainable.
Market snapshot: daily moves and what they indicate
Equities, FX and commodities paint a mixed picture
Wall Street closed modestly higher with the S&P 500 and Nasdaq both registering gains, while major Asian markets posted stronger moves. The S&P 500 rose about 0.2 percent and the Nasdaq gained roughly 0.6 percent. Germany advanced near 0.5 percent, South Korea climbed 2 percent and Japan’s TOPIX jumped 2.7 percent. China finished lower. Sector action was uneven. Tech and industrials each added roughly 0.9 percent while energy fell more than 1.3 percent. Surging single-stock moves stood out. Boeing (NYSE:BA) rallied about 10 percent and Intel (NASDAQ:INTC) jumped around 8.5 percent.
In foreign exchange, the Indian rupee slipped to 90.00 per dollar for the first time, making local import costs a near-term issue for India. The Japanese yen was the main G10 decliner. Brazil’s real strengthened roughly 0.5 percent. Cryptocurrencies also moved higher, with Bitcoin up about 6 percent.
Commodities were mixed. Oil fell more than 1 percent while gold recorded its largest two-week decline in recent sessions, and silver remained close to record highs.
Federal Reserve and inflation: the immediate test
Friday’s PCE reading will clarify rate expectations
Markets entered a blackout period ahead of the Fed’s Dec 9-10 meeting with rates markets pricing a high probability of a cut. That probability eased from near certainty to around 80 percent after a cooler manufacturing ISM reading showed activity contracting even as prices ticked higher. The key risk ahead is that Friday’s PCE inflation report prints hotter than forecasts. If that happens traders may pare back rate-cut odds. The Fed is unlikely to surprise markets, so officials will be watching PCE closely and will stress communication during the meeting.
Global inflation signals give reason for caution. Tokyo’s recent inflation surprised on the upside and renewed bets of further Bank of Japan tightening. Flash euro zone inflation also came in slightly higher than expected, reducing odds of ECB easing next year. From a bond perspective this combination has helped long yields creep higher and curves steepen in several markets.
Tech and AI sentiment: cloud deals and chip tie-ups driving momentum
Major partnerships are fueling investor appetite
AI optimism led the market’s rebound. Tech stocks have recovered ground with a string of strong sessions that pushed the sector up about 8 percent over several trading days. Semiconductor indicators outpaced that gain. Strategic moves are central to sentiment. Amazon (NASDAQ:AMZN) announced that its AWS cloud unit will adopt key Nvidia (NASDAQ:NVDA) technology for future AI computing chips and also rolled out new Nova AI models. Those kinds of tie-ups are accelerating integration across cloud providers and chipmakers and are being treated as concrete steps toward scaling AI compute.
Investors are watching whether these product and partnership announcements translate into faster revenue adoption for cloud services and higher chip demand. For now the market is rewarding the combination of AI product road maps and visible commercial partnerships, which is supporting broader risk appetite.
Foreign demand and bond curves: record inflows and steeper yields
Overseas buying is reshaping capital flows into U.S. equities
Official Treasury International Capital data show net private sector purchases of U.S. stocks reached $646.7 billion in the 12 months through September. That run rate smashed the previous peak of roughly $392 billion set in 2021 and has been breaking monthly records throughout the year. This flood of foreign demand has helped underpin U.S. equities despite relative outperformance from some European and Asian markets.
At the same time, bond markets are signaling a reassessment of future inflation and rates. Long-dated Japanese government bond yields hit fresh highs before easing. The U.S. 2s/10s curve and comparable euro zone curves are near the steepest levels seen since 2022-23, and Japan’s curve is the steepest since 2012. The steepening reflects higher long yields coupled with softer front-end yields after comments relevant to Fed leadership caused short-term yield moves to ebb.
What to watch next: headlines and data that could move trading
A compact calendar puts focus on a few key prints and speeches
Traders will be tuned to Friday’s U.S. PCE inflation report as the primary near-term market mover. Ahead of that, a full slate of regional and global reports also matters. Australia will publish final Q3 GDP, South Korea will release revised Q3 GDP, and the U.K. services PMI for November will offer a read on service-sector momentum. Euro zone producer prices for October and remarks from ECB chief economist Philip Lane will add to European pricing signals. In the United States, ISM services for November, ADP private payrolls for November and industrial production for September round out the focus.
Markets appear to be balancing three forces: record foreign equity inflows that support risk assets, tech and AI developments that are driving concentrated gains, and inflation data that may reassert pressure on bond yields. In the coming sessions investors will watch whether the flow of overseas capital and the string of tech announcements can absorb any surprise in inflation prints. For traders and portfolio managers the week ahead will provide clarity on both the durability of the current equity rally and the path of interest rate expectations, without offering prescriptive advice on positioning.
