Nasdaq Rises as Stock Market Anticipates New Fed Cut
Nasdaq and other indices are all rising slightly today despite Nvidia's less than stellar earnings report.
Quick overview
- The Nasdaq Composite rose by 0.21% on Wednesday, with the Dow and S&P 500 also experiencing gains.
- Nvidia's stock fell 1.51% in premarket trading despite beating revenue estimates, due to a poor sales outlook for the next quarter.
- Investors are now looking to the Federal Reserve's upcoming decision on interest rates, with a potential cut that could boost the stock market.
- Concerns remain about inflation and the timing of a rate cut, as the stock market is currently near all-time highs.
The Nasdaq Composite added 0.21% on Wednesday before trading closed off, and the other top indices rose as well, with the Dow gaining 0.32% and the S&P 500 climbing 0.24%.
In premarket trading, Nvidia’s (NVDA) stock fell 1.51% Thursday even though they beat revenue estimates. The downside was that they have a poor sales outlook for the next quarter, and the company provided no guidance for the remainder of 2025.
Investors were looking to Nvidia to excel last quarter in Wednesday’s report and give the rest of the market a boost. As the company with the highest market capitalization, Nvidia is strategically positioned to help lead the market and especially to drive AI trends. With low expectations for the next quarter, though, that could cause stock market sentiment to decline, and we could see a dip in Thursday’s index numbers.
New Interest Rate Cut Could Spur Markets
The markets will be looking now to the Federal Reserve to make a decision on interest rates. It is possible that they will cut the current rate on September 17th, which is the next scheduled rate meeting. A new rate cut could cause inflation to rise over the long term, which is why the Fed has been hesitant to institute one, but it could also give the stock market a boost.
There is a high probability of a new cut since President Donald Trump is working hard to oust any Fed board members who could oppose his push for another rate cut. Jerome Powell is already on his way out, and he has been the most outspoken board member to oppose a hasty rate cut. Lisa Cook may be dismissed from her position as board member governor if Trump has his way, but she is fighting the action in court.
What tends to happen when a new rate cut is announced is that the stock market climbs higher for the short term, and then when the cut is instituted, we see further market price increases. There is concern, however, that it may be too soon to issue another cut with inflation so high and so resilient. For now, the stock market is relatively high, with the Nasdaq and S&P 500 both close to their all-time highs.
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