Federal Reserve Divided on Rate Cuts as Nvidia Headlines Stock Market Gains
The stock market is slightly higher today after tech stocks performed well on Wednesday thanks in part to Nvidia's strong showing.
Quick overview
- U.S. stocks rose on Wednesday, led by Nvidia's 1.63% gain, signaling a potential recovery for tech stocks after a bearish period.
- The Nasdaq increased by 0.8%, the Dow Jones climbed 0.3%, and the S&P 500 added 0.6%, nearing a new record high after a 12% rise over the past year.
- Nvidia's stock surged following a partnership announcement with Meta Platforms, which plans to invest $136 billion in AI by 2026.
- The Federal Reserve decided against new rate cuts this week, citing economic strength and the need for inflation to drop further before making any changes.
U.S. stocks climbed on Wednesday with Nvidia (NVDA) leading the way as it gained 1.63%, overcoming recent trends for this and other technology stocks.
Wednesday ended on a positive note for the stock markets, and tech stocks appear to be making a comeback after weeks of oppressively bearish movement. Nvidia helped push stocks higher, as investors watched with interest as the stock made impressive gains this week.
The Nasdaq was able to increase by 0.8%, while the Dow Jones climbed 0.3%, and the S&P 500 added 0.6%. Now, the S&P 500 is very close to setting a new record high after climbing 12% over the last 12 months.
Tech Stocks Enjoy Minor Rally
It is not accurate to say that investors are no longer worried about AI disruption and profitability for tech companies, but technology stocks have done very well this week. Nvidia has been one of the better performing tech stocks so far, moving from $181 to $187 per share in a shortened week.
The company has seen its stock jump after announcing a partnership with Meta Platforms (META). The two companies will work together as Nvidia provides millions of AI components necessary for Meta’s AI expansion. It should be noted that Meta Platforms is one of the AI-related companies that performed exceptionally well this earnings season and saw its stock jump after the quarterly earnings report. Meta plans to spend $136 billion on AI in 2026, soundly hushing talk that the market may be dead or stagnant soon.
Several tech companies released their earnings reports this week, including Cadence Design Systems (CDNS), which gained 7.6% after they shared profits and revenue numbers that exceeded Wall Street predictions. Analog Devices (ADI) also gained 2.6% this week when they announced their earnings for the most recent quarter. The chip company beat expectations as they enjoyed record customer orders for the quarter.
The FOMC meeting on Wednesday was not decisive. The members of the Federal Reserve were split on whether to issue a rate cut or not. They mentioned the surprising strength of the economy but also said that a new interest rate cut would not be coming just yet. The future interest rate decisions could lead to a rate hike according to Fed officials. They reiterated that they are waiting for inflation to drop in order to issue more rate cuts with a clear conscience. The target for the Fed is 2%, and inflation is currently sitting at 2.4%- a drop from the previous month.
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