Mrng/AP

Nvidia Surge ⁤Fuels Market ​Rally, While Fed Signals Rate Cut patience

NEW YORK, May 29 – Nvidia shares ⁤soared to a record high on Wednesday, propelling the Nasdaq to its strongest session ⁤in ⁣over two months, while comments from Federal Reserve officials tempered expectations for near-term interest ⁣rate cuts. The tech giant’s stock jumped 17.8%,adding over $200 billion in ‍market capitalization and solidifying its position‍ as the third-most valuable U.S. ⁢company.

The market’s reaction underscores a pivotal ⁣moment for investors: enthusiasm surrounding artificial ⁤intelligence and its potential economic impact is⁣ clashing with a cautious​ Federal‌ Reserve navigating ‌persistent inflation. Nvidia’s gains, driven by strong demand for⁢ its AI chips, are lifting the broader tech sector, but the Fed’s signals suggest the path to‍ lower borrowing costs -‌ and continued market gains – may be ‍longer and more uncertain than previously anticipated. This dynamic impacts everything ⁣from corporate‍ investment⁢ strategies ⁤to consumer spending, and will ⁤likely define market performance for the remainder of the year.

nvidia closed at $1,224.20, contributing significantly to⁣ the Nasdaq Composite‘s‍ 2.53% increase to 18,820.73. The S&P 500 rose 1.03% to 5,307.36, and‌ the Dow Jones Industrial Average gained 0.32% to 38,806.38. The rally followed data released on Tuesday showing a stronger-than-expected increase in new home sales,⁤ adding to concerns ‍about sticky inflation.

Adding to the⁢ cautious sentiment, Fed⁢ Governor christopher ‌Waller stated that he needs to see “considerably more data”‍ showing inflation is⁣ moving toward the central bank’s 2% target before supporting a rate cut. He suggested​ that waiting⁤ a few months longer to‍ ease ​policy is preferable to risking a resurgence of inflation.

“We’ve got time to take the foot off the gas,” Waller said in remarks prepared for delivery at ​a conference in Washington. “I don’t want⁤ to be in a situation where we ‌have to reverse course.”

The⁣ comments echoed similar sentiments from other Fed ⁣officials, including New⁤ York Fed President John williams, who emphasized the need for continued vigilance on inflation.Market participants now see a roughly 68% chance of ‌the⁣ Fed cutting rates by September, down from ⁢over 70% earlier in the week, according to the CME‌ fedwatch tool.

Despite the Fed’s caution, ‌analysts remain optimistic about the ‍long-term outlook for the market, citing strong corporate earnings‍ and continued economic⁣ growth. However, they acknowledge that volatility is likely to persist‍ as investors grapple with⁣ the⁢ competing forces ‍of AI-driven optimism and monetary policy‍ uncertainty.

Reuters reported ⁣that Nvidia’s market capitalization now stands at over $2.5 trillion, surpassing Amazon and ​closing in on Apple and Microsoft. The company’s success‍ is fueling a broader rally in semiconductor stocks, with advanced Micro⁢ Devices and Qualcomm ⁤also posting ‌gains on Wednesday.

Jamie McGeever has been‌ a financial ​journalist as 1998, reporting from Brazil, Spain, New York, London, and now back in the US again. His experience and⁢ expertise are in global markets, economics, policy, and investment. Jamie’s roles ‍across ⁣text ⁤and TV have included ⁤reporter, editor, and columnist, and he has covered key events and policymakers in several cities around⁤ the world.