New Rate Cut Boosts Nasdaq 0.55% while Dow Jones Slips
Stocks are mixed today after a Fed rate cut, but we expect to see tech stocks perform well as a result.
Quick overview
- The Nasdaq Composite rose 0.55% following a 25-basis-point rate cut by the Federal Reserve, while the Dow Jones fell 0.16%.
- Technology stocks are expected to benefit significantly from the rate cut, with strong performances from companies like Nvidia and Microsoft.
- The artificial intelligence sector is projected to experience substantial growth in 2026, further boosting tech stocks.
- There is uncertainty regarding future rate cuts, with the Fed indicating that another cut before the end of the year is not guaranteed.
The Nasdaq Composite stock market index climbed 0.55% on Wednesday after the Federal Reserve announced a 25-basis-point rate cut while the Dow Jones dipped.
The Dow was down 0.16% and the S&P 500 was flat as Wednesday trading closed off on news of a new 25-point rate cut. The Nasdaq was the only index to climb, with a 0.55% increase from the previous day, allowing the index to stay at a record high thanks to decent performances from several leading tech stocks.
It is the technology stocks that stand to benefit tremendously from the rate cut, since they have been performing well all year. Also getting a boost from the cut are small caps stocks, which are those stocks with a market capitalization between $250 million and $2 billion.
Stock Market Expected to Climb This Week
Usually, when there is a new Fed rate cut, the stock market will perform well, and we specifically tend to see growth from stocks with a strong potential for future earnings. This year, these are definitely the pharmaceutical stocks and AI-focused stocks like AMD, Nvidia, Microsoft, and Meta Platforms. The artificial intelligence niche has grown tremendously in 2025 and is expected to grow even further in 2026, so the stocks in this corner of the tech market expect incredible growth and will likely benefit the most from this week’s Fed cut.
Nvidia (NVDA) is the stock with the largest market capitalization right now and one for the top performers over the last few years. In premarket trading for Thursday, at the time of writing, the stock was down 1.69%, but that is expected to change rapidly. Nvidia remains around $203 per share, which is a record high spot for the stock. Even with the small dip this morning, the stock is performing extremely well and is expected to grow much further in the coming months.
Microsoft (MSFT) is one of several major tech companies to report its quarterly earnings this week. The company noted 39% growth for its Azure cloud service, and the stock is trading around $530. That is a stellar price for the company that has seen continuous growth this year and is expected to keep climbing as its cloud services continue to be used by a number of major tech companies.
There is no clear indication as to whether a new rate cut will be issued in December, which is when the next rate decision meeting for the Federal Reserve will take place. The Fed at this week’s meeting said that another rate cut before the end of the year is not a foregone conclusion and investors should not be counting on it.
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