Weekly wrap

Week:

S&P500: +0.9% FTSE100: -0.4%  Gold: -0.2% Bitcoin: -1.5%

YTD:

S&P500: +17.1%  FTSE100: +17.0%  Gold: +60.5% Bitcoin: -1.8%

Markets Turn Higher as Rate-Cut Hopes Build and Small Caps Lead

Source: Connect Weekly | Week ending 6 December 2025

US stocks posted a strong weekly performance as cooling inflation, easing labour data, and a rebound in speculative risk appetite helped lift the major indices. The S&P 500 and Nasdaq 100 extended their winning streak, while the Russell 2000 notched fresh record highs midweek before fading slightly on Friday. AI, quantum, and high-beta names staged a comeback after a shaky start, and expectations firmed for a December rate cut at next week’s Fed meeting.

What drove markets this week

Markets opened the week on the back foot as risk appetite thinned. Bitcoin slumped below 93,000 dollars and speculative segments sold off sharply. Still, optimism for a December rate cut remained firm, with Bank of America joining a growing chorus expecting the Fed to move next week. Synopsys and Accenture were bright spots after striking new AI-linked partnerships with Nvidia and OpenAI, but weakness dominated across crypto, air taxis, EVs, and Asia-exposed industrials.

Tuesday saw a decisive reversal. Megacap tech drove all major US indices higher as Bitcoin rebounded and risk sentiment snapped back. Amazon launched its Trainium3 chip at AWS re:Invent, fuelling gains across AI hardware and software. Intel hit a 52-week high on bullish options flow; newly public Beta Technologies rallied on a deal with Eve Air Mobility; Dell, Boeing, and MongoDB rose on strong results and positive news. AI-adjacent energy names like Bloom, Oklo, and Plug Power surged on speculative options activity.

Wednesday extended the rally despite mixed megacap performance. A surprise drop in private payrolls solidified expectations for a Fed cut, boosting small caps and equal-weight indices. Robotics stocks surged after reports that Commerce Secretary Howard Lutnick plans to back the industry aggressively. Marvell and POET Technologies soared on optimistic AI commentary, while Uber advanced as it began matching riders with robotaxis in Dallas. Inditex, American Eagle, and Dollar Tree posted strong earnings-driven gains.

Small caps take the lead ahead of the Fed

Thursday saw large caps stall while the Russell 2000 closed at a record high. Sentiment held firm despite jobless claims hitting a three-year low, and hopes for a rate cut stayed intact ahead of Friday’s PCE release. High-beta quantum names such as IonQ and Rigetti bounced sharply on heavy call buying. Oklo, NuScale, and Bloom Energy also rallied. Meta and Salesforce logged strong sessions, while Nvidia proved resilient despite new legislative chatter about chip export restrictions. By contrast, Snowflake, Symbiotic, and Intel slid on guidance and strategic uncertainty.

Friday: Stocks eke out a gain as inflation remains mild

A mild September PCE reading landed exactly in line with expectations, maintaining hopes for a rate cut at next week’s Fed meeting. The S&P 500 and Nasdaq 100 extended their gains, while the Russell 2000 dipped after Thursday’s record. The S&P 500 came within reach of an all-time high intraday before losing steam, but still closed the week with solid momentum, its ninth gain in the last ten sessions.

Warner Bros. Discovery rallied after Netflix agreed to acquire its studio and streaming divisions for 82.7 billion dollars. Chip stocks Micron, Seagate, Western Digital, and Sandisk all rebounded after a soft October. Ulta Beauty jumped on a strong Q3 report, while Southwest Airlines and Victoria’s Secret advanced on improved outlooks. Cloudflare slid after a major outage briefly knocked out large parts of the internet but pared losses once the issue was resolved.

Looking ahead

All attention now shifts to Wednesday’s Fed decision. With private payrolls cooling, PCE cooperating, and financial conditions easing, markets increasingly expect a December cut, though policymakers remain divided. Earnings from Oracle, Broadcom, and Costco will provide fresh signals on tech demand and consumer health. With small caps breaking higher and risk appetite returning, traders head into the final stretch of the year with optimism, but also an eye on whether AI and speculative pockets can support the rally into 2026.