US equities climbed, led by tech stocks, after Federal Reserve minutes indicated a strong likelihood of further rate cuts this year, driven by concerns over the labor market and diminishing inflation risks; traders now price in a 96% probability of another cut. Nvidia rallied over 1% on accelerated chip demand and its investment in xAI, fueling AI sector optimism despite earlier concerns from Oracle's cloud margins. The market remains attentive to the Fed's dovish stance, though the ongoing government shutdown poses uncertainty by delaying critical economic data.
US indices climbed after Fed minutes signaled more cuts. Traders bet on a dovish Fed as tech stocks like Nvidia lifted Nasdaq and S&P500 higher. U.S. stocks advanced Wednesday as traders digested Federal Reserve minutes that pointed toward additional rate cuts later this year. The S&P 500 gained 0.6%, the Nasdaq rose 0.9%, and the Dow Jones Industrial Average added 147 points, or 0.3%. The move came late in the session after investors parsed details showing policymakers’ growing concern over the labor market and diminishing inflation risks—supporting the case for further easing. Minutes from the Fed’s September meeting showed that “around half” of officials expect two rate cuts by year-end, while others see room for three. The committee voted 11-1 to lower rates by 25 basis points in September, the first move of the year. The minutes indicated near-unanimous agreement that softening employment conditions justify additional easing. Officials noted inflation pressures have either stabilized or declined, giving the central bank room to act. Traders now price in a 96% probability of another rate cut at the next meeting, underscoring market conviction that policy will turn more supportive as the labor market cools. Wall Street appeared confident that the Fed’s dovish stance will sustain equity momentum. The S&P 500’s technology and utilities sectors led gains, both nearing new highs. Nvidia rallied over 1% after CEO Jensen Huang said chip demand has accelerated over the past six months, adding optimism around the AI trade that has driven much of this year’s market strength. Huang also confirmed Nvidia’s financial involvement in Elon Musk’s xAI venture, highlighting continued capital inflows into the AI ecosystem. The renewed rise in Nvidia shares helped offset earlier weakness tied to Oracle’s disappointing cloud margins, which had raised concerns about excessive optimism in the AI space. While some analysts warn of parallels to the late-1990s tech bubble, others note that continued enterprise and infrastructure investment still supports the sector. Traders remain attentive to potential corrections in tech-heavy indexes but view sustained demand for chips as a sign of resilience. The ongoing U.S. government shutdown, now in its eighth day, adds uncertainty to the policy outlook. Delays in key data releases, including the September employment report, could hinder the Fed’s ability to assess economic conditions. The Senate again failed to pass competing funding bills, leaving markets wary of prolonged disruption. With inflation risks subsiding and the labor market under pressure, the Fed appears poised to ease further this year. Equities could see continued upside if upcoming inflation data—assuming it’s released—reinforces the case for another cut. Traders will monitor upcoming Fed speeches and CPI readings closely, as confirmation of a softening trend could strengthen risk appetite heading into the next policy meeting. More Information in our Economic Calendar. James Hyerczyk is a U.S. based seasoned technical analyst and educator with over 40 years of experience in market analysis and trading, specializing in chart patterns and price movement. He is the author of two books on technical analysis and has a background in both futures and stock markets. U.S. equities advanced following the Federal Reserve's September meeting minutes, which indicated a strong propensity for further rate cuts this year. Policymakers' growing concerns over the labor market and diminishing inflation risks, with 'around half' of officials expecting two additional cuts and others three, led traders to price in a 96% probability of another cut at the next meeting, creating a dovish market outlook. The S&P 500 gained 0.6%, Nasdaq rose 0.9%, and the Dow added 0.3%, signaling positive market reaction to potential easing. The technology sector was a primary driver of these gains, with Nvidia (NVDA) rallying over 1% on accelerated chip demand and its confirmed investment in Elon Musk's xAI venture. This fueled optimism in the AI trade, offsetting earlier concerns raised by Oracle's (ORCL) disappointing cloud margins, and highlighting continued capital inflows into the AI ecosystem, pushing the S&P 500's technology sector toward new highs. While the market sentiment appears moderately positive and optimistic, buoyed by the Fed's dovish stance and sustained tech sector demand, an ongoing U.S. government shutdown introduces uncertainty. Delays in critical economic data, such as the September employment report, could hinder the Fed's ability to accurately assess economic conditions, potentially disrupting the anticipated policy trajectory and requiring close monitoring of upcoming CPI readings and Fed speeches.
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