Dow Jones Inches Higher Amid Anticipation of Fed Rate Cut and Powell Testimony

The U.S. stock market edged higher on Wednesday, with the Dow Jones Industrial Average finishing the session at 37,891.19, marking a modest gain of 87.42 points. The rally was driven by growing market speculation surrounding a potential interest rate cut in the coming months, fueled by recent economic data showing slowing inflation and a cooling labor market. Investors are closely watching Federal Reserve Chair Jerome Powell’s scheduled testimony before Congress on Thursday, which is expected to provide further clarity on the central bank’s monetary policy path. Palantir Technologies led sector gains, climbing 7.8% to close at $22.96 per share. The company reported third-quarter revenue of $814 million, surpassing analysts’ consensus estimate of $785 million. The results were bolstered by a 24% year-over-year increase in government and defense AI contracts, including a new $210 million deal with a U.S. national security agency. The company also announced a 5% expansion in its workforce dedicated to artificial intelligence platforms, signaling continued investment in long-term growth. The broader market showed modest gains, with the S&P 500 rising 0.15% and the Nasdaq Composite edging up 0.07%. Tech stocks were mixed, weighed down by a 1.2% decline in Nvidia after the semiconductor giant missed revenue guidance for the fourth quarter, though shares rebounded slightly in after-hours trading. Treasury yields dipped, with the 10-year yield falling to 4.21%, reflecting investors’ expectations of a dovish Fed shift in early 2026. Market participants are now focused on the Federal Reserve’s December policy meeting and Powell’s testimony, which could influence rate cut timing. Analysts project a 68% probability of a 25-basis-point rate cut in March 2026, up from 55% last week. The revised outlook has lifted financial and real estate sectors, with the S&P 500 Financials index gaining 0.9% and REITs rising 0.7%.