The Fed Effect in Markets: Nvidia's Record Surge

U.S. stock indices moved negatively after the Federal Reserve made its second rate cut of the year, erasing gains. Federal Reserve Chairman Jerome Powell indicated that a potential rate cut in December was not a "guarantee," leading to a negative reaction in stocks.

The S&P 500 index fell by 0.5%, while the technology-heavy Nasdaq Composite decreased by 0.2%. The Dow Jones Industrial Average experienced a loss of 0.3%.

This afternoon, the central bank implemented a quarter-point or 25 basis point rate cut; however, Powell refrained from hinting at a new cut in the December meeting.

Meanwhile, Nvidia shares surged by 12% after President Donald Trump hinted at a reduction in sales restrictions in China. Trump stated that Nvidia could discuss its Blackwell AI processors during an anticipated meeting with Chinese President Xi Jinping on Thursday.

This gain allowed Nvidia to surpass a market value of $5 trillion, making it the first company to reach this level in history. This increase came after Nvidia shares hit a historical peak despite a disaster on Tuesday.

Eyes are now on the quarterly earnings reports of tech giants like Alphabet (GOOG), Meta Platforms (META), and Microsoft (MSFT). These reports will allow investors to assess the returns on their artificial intelligence investments. Any disappointment could lead to a downturn in the broader markets.

Powell stated, "No definitive decision was made regarding a new rate cut at the December meeting." However, he noted that there were differing views among members regarding policy decisions.

The rate cut in question was approved by a vote of 10-2; however, two members opposed the decision. Stephen Miran expressed a desire for a larger reduction of 50 basis points, while Jeff Schmidt preferred to keep rates steady.

The drop in the markets affected investors' expectations for a rate cut in December. Powell reiterated that "no decision has been made." In the press conference following today’s meeting, he stated, "There are two-sided risks regarding both employment and inflation."

Lastly, Alphabet (GOOG) is preparing to announce its third-quarter financial results. Analysts expect the company to generate $99.85 billion in revenue for the quarter, representing a 13% increase compared to the same period last year. However, the antitrust lawsuits facing Alphabet may negatively impact the growth of its earnings.