U.S. stocks recovered most of last week's sharp losses, with the S&P 500 gaining 3.65% this week and moving to within about 2.5% of its record high. The rebound came as hotter-than-expected inflation data raised market expectations for a Federal Reserve rate hike in December. Bitcoin, meanwhile, remained well below its peak, showing that crypto assets have yet to match the stock market's recovery.
S&P 500 retraces most of last week's sell-off
A sell-off in artificial intelligence-related stocks weighed on U.S. markets last week. On Nov. 5, the Nasdaq Composite fell 5.5%, while the S&P 500 recorded one of its largest single-day losses in market value. Stocks have since recouped most of those declines, leaving the S&P 500 about 2.5% below its record high.
This week's rally suggests investors returned to some stocks after the sharp pullback, with AI and chipmakers among the shares attracting dip-buying. But the index's proximity to a record does not mean market volatility has passed. Inflation data and expectations for interest rates remain key influences on the outlook.
Hotter October CPI lifts December hike expectations
The U.S. Consumer Price Index rose 0.4% in October from a month earlier, above the market forecast of 0.3%. Core prices increased 0.3% for a third consecutive month. After the data, traders put the probability of a Federal Reserve rate hike in December at 87%.
The combination of firm inflation and rising share prices has kept attention on the path of interest rates. Falling oil prices have provided some relief to inflation concerns, but the available data do not indicate that this has changed the market's overall view of December policy. The Fed is scheduled to meet on Dec. 9, with its rate decision set to be a focus for markets.
Bitcoin trails the equity market's recovery
Bitcoin and stocks have been influenced by similar macroeconomic factors at points in 2026. But the crypto market has not rebounded to the same extent during the latest recovery in U.S. equities. Bitcoin was trading around $74,400, about 40% below its record high, while exchange-traded funds (ETFs) faced outflows.
The divergence shows that a stock-market rebound has not automatically brought renewed buying in crypto assets. For investors tracking correlations across risk markets, the S&P 500's rapid recovery contrasts with Bitcoin's continued weakness. The figures available do not specify the size or duration of the ETF outflows.