US stocks rallied on Wednesday amid a tech revival that sent the Nasdaq surging, as investors prepared for the Federal Reserve’s decision on whether to cut interest rates.
The S&P 500 (^GSPC) rose by 1.5% while the tech-heavy Nasdaq Composite (^IXIC) soared more than 2%. The Dow Jones Industrial Average (^DJI) rose a modest 0.1%.
Tech stocks are in the ascent again after taking a battering in recent days. The first earnings from “Magnificent Seven” megacaps stirred fears the AI boost would prove a bust, after falling short of high hopes.
A swath of positive news is spurring a pre-market comeback for chip stocks, with AMD (AMD) shares getting a boost from an AI-driven earnings beat. Nvidia (NVDA) climbed over 7%, regaining ground lost in a steep drop on Tuesday in the halo of the results.
Also on Wednesday, Morgan Stanley noted that the recent 25% drawdown in Nvidia stock presented a “good entry point,” marking a sentiment shift in what’s been an otherwise tough July for the AI leader.
Elsewhere, Dutch chip gear giant ASML’s (ASML, ASML.AS) stock surged after Reuters reported the US will exempt some foreign allies from new China curbs.
As that pressure eases, the spotlight is turning to the Fed, which is expected to hold interest rates steady but signal a cut is in the pipeline when it ends its July policy meeting later Wednesday.
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The market is overwhelmingly convinced a Fed pivot is coming in September — the debate now is whether rates will go down by 0.25% or 0.5%, according to the CME FedWatch tool. Chair Jerome Powell’s post-meeting comments will be closely followed for hints that recent inflation and labor data could support a deeper cut.
Meanwhile, more earnings are set to roll in, Meta’s (META) results due later will be scrutinized for signs that the Facebook parent’s AI spending is paying off — the big question for megacaps this season.
In commodities, oil jumped after the killing of Hamas’ political leader in an airstrike stoked geopolitical tensions. Brent crude (BZ=F) futures, the global benchmark, rose 3% to top $80 a barrel. US benchmark West Intermediate crude futures (CL=F) climbed to $77.31 a barrel, a 3.5% gain.
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