Nvidia Rises 3%, Leading Tech Stocks Higher
Fed to Announce Rate Decision in the Afternoon; 0.25% Cut Likely
Microsoft, Alphabet, and Meta to Release Earnings After Market Close
U.S.-China Trade Truce Expected on the 30th, Supporting Investor Sentiment
All three major U.S. stock indexes rose simultaneously on October 29 (local time) in New York. On this day, growing expectations for an additional Federal Reserve rate cut, combined with the strength of technology stocks led by artificial intelligence (AI) giant Nvidia, pushed all major indexes to new intraday record highs.
On the 27th (local time), traders are working on the trading floor of the New York Stock Exchange (NYSE) in the United States. Photo by Reuters Yonhap News
As of 12:55 p.m. on the New York Stock Exchange, the blue-chip Dow Jones Industrial Average was up 281.44 points (0.59%) at 47,987.81. The large-cap S&P 500 Index rose 19.29 points (0.28%) to 6,910.18, while the tech-heavy Nasdaq Composite gained 138.039 points (0.58%) to 23,965.532.
By stock, Nvidia climbed 3.18%, becoming the first company in the world to surpass a $5 trillion market capitalization. Other semiconductor stocks, including Broadcom and Micron, also posted strong gains of 1.83% and 3.63%, respectively.
Investors are betting that, despite concerns of an AI bubble, the innovation and profitability of AI will be sustained in the long run. Jensen Huang, CEO of Nvidia, reinforced optimism about AI by stating at a developer event (GTC) in Washington, D.C. the previous day that AI chip orders could generate $500 billion in revenue over the next several quarters. He also announced a $1 billion investment in Finnish telecommunications equipment company Nokia and the establishment of a strategic partnership for the development of next-generation 6th-generation (6G) mobile communication technology.
Keith Buchanan, Senior Portfolio Manager at Globalt Investments, commented that the partnership between Nvidia and Nokia "shows where the earnings story is headed" in the AI industry. He added, "We have entered the next phase of the AI story," and analyzed, "We are not just focusing on earnings, but also closely watching the acceleration of growth these companies are projecting."
Investors' attention is focused on the Federal Reserve's interest rate decision scheduled for 2 p.m. on the same day. Last month, the Fed cut its benchmark rate by 0.25 percentage points to a range of 4.0-4.25%, and there is a strong possibility of another cut of the same magnitude this time. Market participants are also closely monitoring whether Fed Chair Jerome Powell will signal an additional rate cut in December during his press conference, which will be held 30 minutes after the rate decision. However, there are doubts as to whether Powell will deliver a dovish (pro-easing) message.
After the market closes, major big tech companies such as Microsoft, Alphabet (Google's parent company), and Meta Platforms (Facebook's parent company) will all release their third-quarter earnings for this year. Apple and Amazon are scheduled to announce their results on the 30th. If these companies deliver strong earnings, confidence in AI profitability is expected to grow, potentially fueling a continued stock market rally.
The U.S.-China summit scheduled for the 30th is also considered a major event that could determine the direction of the stock market. The two countries have reportedly reached a tentative agreement to suspend China's rare earth export controls and for the U.S. to withdraw its proposed 100% additional tariffs on Chinese goods, as well as finding compromises in other areas such as fentanyl and soybeans. As a result, the market expects the two countries to be on the verge of a de facto "trade truce."
U.S. Treasury yields remained steady. The yield on the benchmark 10-year U.S. Treasury note, a global bond market indicator, rose 1 basis point (1bp = 0.01 percentage point) from the previous session to 3.99%. The yield on the 2-year Treasury, which is sensitive to monetary policy, also increased by 1bp to 3.5%.
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