Smart Investor: Tech Stocks to Buy Now, Powell’s Signal on Rates, and Nvidia on Deck

Fed Chair Jerome Powell's recent speech is widely interpreted as signaling an interest rate cut, potentially by September, shifting focus to a weakening jobs market and prompting a 4% market rally with falling bond yields. While overall valuations appear stretched, the Morningstar Global Markets ex-US Index has significantly outperformed its US counterpart in 2025, highlighting a potential rotation. Investors are now keenly awaiting Nvidia's upcoming earnings report, a crucial event for the tech and artificial intelligence sectors.

Analysis

Economist interpretation of Federal Reserve Chair Jerome Powell's latest speech indicates a significant dovish pivot, with an emphasis shifting from tariff-related inflation risks to concerns over a weakening jobs market. This has fueled market expectations for an interest rate cut as early as the September Fed meeting. The market reacted strongly to this signal, with equities posting a 4% weekly gain and bond yields falling. However, this rally has pushed asset valuations to levels described as "stretched," creating a challenging environment for deploying new capital. Amidst expensive domestic valuations, international stocks are demonstrating notable strength; the Morningstar Global Markets ex-US Index has more than doubled the return of its US counterpart in 2025. In the technology sector, all eyes are on the upcoming earnings report from Nvidia, which is considered a critical bellwether for the semiconductor industry and the broader artificial intelligence boom.

Key Decisions for Investors

• Given the market's strong positive reaction to potential rate cuts, investors should review portfolio positioning for a lower interest rate environment, but remain cautious of the stretched valuations in the US market.
• Consider increasing exposure to international equities, as the Morningstar Global Markets ex-US Index is showing significant outperformance against the US market in 2025.
• Closely monitor Nvidia's upcoming earnings report on Wednesday, as its results and guidance will be a major catalyst for sentiment and performance across the technology and artificial intelligence sectors.
• For those seeking new opportunities in tech, it may be prudent to research under-the-radar companies, such as those highlighted by Morningstar, rather than focusing solely on richly valued large-cap names.