Wall Street pushed straight through fear this week as the market surged even while parts of global trading systems went dark, according to Bloomberg.
A month packed with stress over speculative excess and stretched AI prices flipped fast into a broad risk rally. Stocks, bonds, Bitcoin, and commodities all moved higher together during Thanksgiving week, a time that is usually quiet. This time, trading stayed busy from start to finish.
Crypto moved with speed. Bitcoin climbed more than 7% from its November low. Heavily shorted stocks jumped at the same time. Volatility fell across meme stocks and junk bonds.
Gold and silver moved up as traders increased bets on a Federal Reserve rate cut in December. Positioning across equities and commodities turned risk-on again. Alphabet Inc. added momentum after releasing a new AI model, which helped steady nerves around Big Tech spending and kept US assets in focus.
Exchange outage fails to slow risk appetite
A rare trading halt failed to interrupt the rally. On Friday, a cooling system failure at a data center forced the Chicago Mercantile Exchange to suspend futures and options trading tied to stocks, interest rates, and commodities.
The outage lasted longer than a similar disruption in 2019. Major contracts went offline during an active trading window. Other venues absorbed part of the order flow, but the failure showed how much modern market activity depends on single technical systems.
Price action stayed firm during the outage. Passive investors who stayed exposed to tech-heavy benchmarks were rewarded again. The S&P 500 gained 3.7% in its strongest week in six months.
Among bearish trades, leveraged inverse vehicles tied to the index have now lost more than 80% this year. Tail-risk protection stayed mixed. The Cambria Tail Risk ETF remains modestly positive in 2025, but defensive strategies lagged far behind the speed of the rebound.
Barclays Plc strategist Emmanuel Cau said, “Learning from this week is that ‘don’t fight the Fed and don’t fight AI’ remains the market mantra.
Stocks and all the liquidity-driven markets have rebounded with the probability of a Fed cut in December, while concerns about AI bubble have abated.”
Treasuries also joined the move. The two-year yield dropped to about 3.5% as traders increased bets on lower rates over the coming year.
Bitcoin climbed back above $90,000 after a 30% selloff earlier in the month. The Bloomberg Commodity Index gained more than 2% for the week. Spot silver reached a record during the run.
Fed cut bets lift flows and crush short sellers
Flows into risk never fully stopped even when fear peaked earlier in the month. The Cboe Volatility Index touched its highest level since April just two weeks ago on valuation worries and doubts over the labor market. Despite that, money continued to move into risk assets.
The Vanguard S&P 500 ETF, now valued at $820 billion, is heading for another record year of inflows. Investors sent about $125 billion into the fund in 2025. The ETF is up 17% this year.
A basic bet on US Treasuries delivered close to a 7% return so far this year, marking the strongest annual showing for government debt since 2020. Junk bonds turned higher again. The iShares iBoxx $ High Yield Corporate Bond ETF added nearly 1% this week after investors had pulled back from risky credit earlier.
Short sellers took heavy losses. A Goldman Sachs Group Inc. basket tracking the most-shorted stocks has climbed 28% this year. ETFs that pay three times the inverse of the US stock market have fallen about 84%.
Volatility fell across asset classes. Measures tracking price swings in investment-grade credit and junk bonds both moved lower during the week.
Marlborough Investment Management portfolio manager James Athey said, “To get persistent and meaningful downside in equities probably requires several reinforcing narratives. And given liquidity conditions and changes globally, I think it will need a much more significant level of concern about the economy.”
The change in tone was driven by rising belief that policymakers are moving toward easier conditions. Kevin Hassett, director of the White House National Economic Council under President Donald Trump, has emerged as the front-runner to become the next Fed chair.
Stephen Miran, a current Fed governor, repeated his view that the US economy needs large rate cuts. Economic data pointing to labor market weakness added more weight to bets that the central bank cuts rates in December.
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