Stock market today: Dow, S&P 500, Nasdaq jump as Nvidia's surge to milestone boosts tech

US stocks advanced on Wednesday, with the Nasdaq Composite reaching a new record, primarily driven by Nvidia (NVDA) which briefly surpassed a $4 trillion market capitalization to become the world's most valuable company. This market resilience occurred despite President Trump announcing new tariff rates on various countries and threatening a 50% tariff on copper imports, causing copper prices to retreat. Concurrently, Federal Reserve minutes revealed only a few officials supported an interest rate cut as early as this month, potentially tempering market expectations for aggressive monetary easing.

Analysis

The US equity market displayed a bifurcated performance, with major indices advancing despite significant underlying headwinds. The Nasdaq Composite reached a new record, closing up 0.9%, overwhelmingly driven by Nvidia (NVDA), which briefly surpassed a $4 trillion market capitalization before closing up 1.6% at a new high. This concentrated strength in AI-related stocks occurred amidst escalating trade tensions, as President Trump announced new tariff rates of 20%-30% on several countries and threatened a 50% tariff on copper, causing copper prices to retreat 3%. Simultaneously, newly released FOMC minutes signaled a more hawkish stance than anticipated, with only "a couple" of officials supporting a near-term interest rate cut, pushing market expectations for easing to September at the earliest. Corporate news further highlighted this divergence: M&A activity provided positive catalysts, with Verona Pharma (VRNA) soaring 20% on a $10 billion acquisition by Merck (MRK) and Starbucks (SBUX) gaining on a potential strategic partnership for its China business. Conversely, significant weakness emerged elsewhere, with advertising giant WPP (WPP) plunging over 18% on a slashed profit outlook and T-Mobile (TMUS) facing a downgrade on competitive concerns.

Key Decisions for Investors

• Given the market's narrow leadership, investors should assess portfolio concentration in mega-cap tech, as the rally in names like Nvidia is masking weakness and significant risks in other sectors.
• Monitor companies reliant on international supply chains, especially in industrials and manufacturing, as the threat of new tariffs, particularly the proposed 50% levy on copper, could materially impact input costs and margins.
• Re-evaluate expectations for imminent monetary easing, as the hawkish tilt in the FOMC minutes suggests the Federal Reserve is not poised to cut rates in July, which could temper performance in rate-sensitive assets.
• Pay close attention to M&A catalysts, particularly in biotechnology and AI infrastructure, as strategic acquisitions by large-cap companies like Merck signal a potential source of alpha in an otherwise uncertain market.