Nvidia Surge โคFuels Market โRally, While Fed Signals Rate Cut patience
NEW YORK, May 29 – Nvidia shares โคsoared to a record high on Wednesday, propelling the Nasdaq to its strongest session โคin โฃover two months, while comments from Federal Reserve officials tempered expectations for near-term interest โฃrate cuts. The tech giant’s stock jumped 17.8%,adding over $200 billion in โmarket capitalization and solidifying its positionโ as the third-most valuable U.S. โขcompany.
The market’s reaction underscores a pivotal โฃmoment for investors: enthusiasm surrounding artificial โคintelligence and its potential economic impact isโฃ clashing with a cautiousโ Federalโ Reserve navigating โpersistent inflation. Nvidia’s gains, driven by strong demand forโข its AI chips, are lifting the broader tech sector, but the Fed’s signals suggest the path toโ lower borrowing costs -โ and continued market gains – may be โlonger and more uncertain than previously anticipated. This dynamic impacts everything โฃfrom corporateโ investmentโข strategies โคto consumer spending, and will โคlikely define market performance for the remainder of the year.
nvidia closed at $1,224.20, contributing significantly toโฃ the Nasdaq Composite‘sโ 2.53% increase to 18,820.73. The S&P 500 rose 1.03% to 5,307.36, andโ 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,โค adding to concerns โabout sticky inflation.
Adding to theโข cautious sentiment, Fedโข Governor christopher โWaller stated that he needs to see “considerably more data”โ showing inflation isโฃ moving toward the central bank’s 2% target before supporting a rate cut. He suggestedโ that waitingโค a few months longer toโ ease โpolicy 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 โa conference in Washington. “I don’t wantโค to be in a situation where we โhave to reverse course.”
Theโฃ comments echoed similar sentiments from other Fed โฃofficials, including Newโค York Fed President John williams, who emphasized the need for continued vigilance on inflation.Market participants now see a roughly 68% chance of โtheโฃ Fed cutting rates by September, down from โขover 70% earlier in the week, according to the CMEโ fedwatch tool.
Despite the Fed’s caution, โanalysts remain optimistic about the โlong-term outlook for the market, citing strong corporate earningsโ and continued economicโฃ growth. However, they acknowledge that volatility is likely to persistโ as investors grapple withโฃ theโข competing forces โof AI-driven optimism and monetary policyโ uncertainty.
Reuters reported โฃthat Nvidia’s market capitalization now stands at over $2.5 trillion, surpassing Amazon and โclosing in on Apple and Microsoft. The company’s successโ is fueling a broader rally in semiconductor stocks, with advanced Microโข Devices and Qualcomm โคalso posting โgains on Wednesday.
Jamie McGeever has beenโ a financial โjournalist as 1998, reporting from Brazil, Spain, New York, London, and now back in the US again. His experience andโข expertise are in global markets, economics, policy, and investment. Jamie’s roles โacross โฃtext โคand TV have included โคreporter, editor, and columnist, and he has covered key events and policymakers in several cities aroundโค the world.