Dow Jones 30: Interest Rate Cuts and the Thanksgiving Rally
It is generally undesirable for markets to approach a holiday period with unresolved concerns. While the “Santa Claus rally” is well known, markets also tend to perform strongly ahead of other holidays, including this week’s Thanksgiving break.
This is a shortened trading week in the United States, with equity markets closed today and reduced hours for several futures products. What has stood out instead is the strong performance of major indices. For example, the US30 has risen 2.56 percent from Friday’s close as of today.
The recent momentum in artificial intelligence related trades is beginning to show signs of fatigue. Replacing it in recent days is growing institutional confidence that the Federal Reserve will deliver another interest rate cut in December. Over the past three sessions, Fed Funds Futures have priced in expectations for a 10 basis point reduction in the policy rate, implying approximately a 77 percent probability of a 25 basis point cut in the coming days.
Weak United States consumer data released this week has added to dovish remarks from John Williams, President of the Federal Reserve Bank of New York, who indicated that current monetary policy may already be relatively accommodative and noted signs of deterioration in the US labor market. In addition, the possibility that Kevin Hassett, the current Director of the White House National Economic Council, may be appointed as the next Federal Reserve Chair, alongside noted dove Stephen Miran as a trusted appointee within the Federal Reserve’s decision making structure, has further strengthened expectations of near term monetary easing.
Technical Analysis
The DJ30 has advanced 3.59 percent from last Friday’s lows and is up 2.56 percent on a weekly basis, a notable performance given that it is only Wednesday. The bullish wedge that had been guiding price action since mid June 2025, and which briefly broke to the downside on November 18, has now been reclaimed. The lower Bollinger Band acted as a strong support area on November 20 and 21, around the 45,850 level. Yesterday’s closing price was 47,427. The 48,000 area, where the upper boundary of the wedge currently lies, and 48,450, the historical all time high, now represent critical resistance levels.
Trading volumes during the rebound from 45,800 were substantial, underscoring the strength of the move and warranting close monitoring. The upper Bollinger Band currently stands near 48,275. The 50 day moving average provides support around 46,275, and the lower boundary of the wedge is positioned near 46,800. All time highs remain approximately 2 percent away.
The trend remains strong, though early indications of exhaustion are emerging.
