[New York Stock Market] Nvidia Surge Drives Broad Gains... S&P 500 and Dow Hit Record Highs

NVIDIA Rises 3.97% on Blackwell Production News
Stock Market Gains Despite Consumer Confidence Index Decline
Investors Await Powell's Remarks and PCE Inflation Data

The three major indices of the U.S. New York stock market all closed higher on the 24th (local time). Although the consumer confidence index fell sharply for the first time in over three years, causing a temporary reversal in the market, Nvidia surged nearly 4%, lifting the indices. Chinese-related stocks also rose significantly following China's announcement of large-scale economic stimulus measures.

On this day in the New York stock market, the blue-chip-focused Dow Jones Industrial Average closed at a record high of 42,208.22, up 83.57 points (0.2%) from the previous trading day. The large-cap-focused S&P 500 index also closed at a new record high of 5,732.93, up 14.36 points (0.25%). The tech-heavy Nasdaq index ended the day at 18,074.52, up 100.25 points (0.56%).

[Image source=Yonhap News]

The consumer confidence index released on this day fell significantly short of expectations. The September Conference Board Consumer Confidence Index recorded 98.7, marking the lowest level in about three years. It dropped from 105.6 in the previous month and also fell below the market expectation of 103.9. The recent cooling of the labor market and the historically high inflation-driven rise in living costs have dampened consumer sentiment, causing the market, which had started the day on an upward trend, to temporarily reverse downward.

Eliza Winger, an economist at Bloomberg Economics, analyzed, "The deterioration in the labor market, which was the reason the Fed chose a large rate cut, weighed on consumers' minds in September," adding, "This strengthens our forecast that the unemployment rate will rise to 4.5% by the end of the year."

However, the AI leader Nvidia surged 3.97%, improving investor sentiment and driving the index higher. Nvidia's stock price rise on this day is attributed to a Morgan Stanley report stating that mass production of the new AI semiconductor, Blackwell, has begun. Morgan Stanley estimated that "Nvidia will ship 450,000 Blackwell chips in Q4," and "this new chip alone will generate about $10 billion in revenue." Reports that Jensen Huang, Nvidia's CEO, has completed selling his shares also appeared to have influenced the stock price increase.

Public remarks by Federal Reserve (Fed) officials continued on this day. Michelle Bowman, a Fed governor, expressed concerns about inflation and said that a more cautious approach should have been taken instead of the 'big cut' (0.5 percentage point rate cut) on the 18th. Bowman was the only official opposing the big cut, arguing that a 0.25 percentage point rate cut was appropriate at the time. Investors are also awaiting upcoming speeches this week by Fed Chair Jerome Powell, Fed Governor Adriana Kugler, and Fed Governor Lisa Cook for clues about the Fed's future rate cut magnitude and pace.

The market is increasingly expecting the Fed to implement a big cut at the next Federal Open Market Committee (FOMC) meeting. According to the Chicago Mercantile Exchange (CME) FedWatch tool, the federal funds futures market on this day priced in a 60.7% probability that the Fed will cut rates by 0.5 percentage points at the November FOMC meeting. This rose from 53% the day before, following the consumer confidence index release. The probability of a 0.25 percentage point cut fell from 47% to 39.3%.

Other economic indicators will also be released this week. The August Personal Consumption Expenditures (PCE) price index, the Fed's most closely watched inflation gauge, will be released on the 27th. It is expected to show a 0.1% increase month-over-month and a 2.3% increase year-over-year. This is likely to provide further evidence of inflation easing and support the big cut made on the 18th. On the 26th, one day earlier, the final figure for U.S. Q2 real Gross Domestic Product (GDP) growth will be released. It is expected to show 3% growth on an annualized basis, doubling the 1.4% growth of Q1.

Wall Street expects increased market volatility going forward.

Quincy Crosby, Chief Global Strategist at LPL Financial, said, "Traders welcomed the large rate cut, but the market is likely to experience increased volatility over the coming weeks," adding, "Since stock valuations have risen on the Fed's momentum, the market will react very sensitively if signs of a rapid economic slowdown appear."

By sector, Chinese stocks are strong due to announcements of large-scale economic stimulus, including reserve requirement ratio cuts and interest rate reductions. JD.com surged 13.91%. Alibaba Group rose 7.88%, while PDD Holdings and Baidu increased by 11.24% and 7.4%, respectively.

Government bond yields are moving slightly lower. The U.S. 10-year Treasury yield, a global bond yield benchmark, remains steady at 3.73%, while the 2-year Treasury yield, sensitive to monetary policy, traded down 3 basis points to around 3.53%.

International oil prices rose amid demand expansion following China's stimulus announcement and supply concerns due to Middle East instability. West Texas Intermediate (WTI) crude oil closed at $71.56 per barrel, up $1.19 (1.7%) from the previous day, while Brent crude, the global oil price benchmark, closed at $75.17 per barrel, down $1.27 (1.7%).