Stocks Climb Again on Renewed Nvidia Momentum Ahead of Fed Decision

Technology shares continued to propel global markets higher, fueled by optimism surrounding artificial intelligence and growing anticipation of a Federal Reserve rate cut. Hopes for a potential breakthrough by Nvidia Corp. in China added to the bullish sentiment, keeping investors focused on the tech sector’s next big move.

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Futures for the S&P 500 inched up 0.1%, signaling an extension of the index’s record-setting rally. Nvidia gained 3% in premarket trading after U.S. President Donald Trump said he plans to discuss the company’s Blackwell processors with Chinese President Xi Jinping. The news put Nvidia on track to possibly become the first public company valued at $5 trillion a milestone that would underscore its dominance in the AI landscape.

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The spotlight remains firmly on big tech. Industry heavyweights Microsoft Corp., Alphabet Inc., Meta Platforms Inc., Amazon.com Inc., and Apple Inc. are all set to release their earnings within the next two days. Analysts expect the “Magnificent Seven” to deliver third-quarter profit growth of about 14%, nearly double the 8% forecast for the broader S&P 500.

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Meanwhile, the Federal Reserve is widely expected to announce a 0.25% interest rate cut later on Wednesday, marking a shift toward a more supportive policy stance. Policymakers have signaled an emphasis on bolstering the labor market while monitoring inflation trends. Investors will also be looking for any hints about when the Fed might pause the reduction of its balance sheet.

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“The AI story is still very much alive,” said Anthi Tsouvali, multi-asset strategist at UBS Global Wealth Management. “The Fed’s decision to cut rates and the likelihood of another 25-basis-point cut ahead should be good news for the economy. It’s a move that loosens financial conditions and encourages growth.”

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In the bond market, U.S. Treasuries edged lower across maturities as traders braced for potential hawkish remarks from Fed Chair Jerome Powell, which could spark fresh volatility. The 10-year Treasury yield rose one basis point to 3.99%, while the dollar rebounded from a two-day losing streak.

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“The risk is that one or two Fed members could favor holding rates steady,” wrote Elias Haddad of Brown Brothers Harriman. “Such a split decision could give the dollar some intra-day support.”

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Across the Atlantic, European stocks nudged higher, led by gains in mining shares after copper prices climbed to an all-time high on the London Metal Exchange. Often seen as a barometer of global growth, copper’s rally reflected optimism as the U.S. and China move closer to resolving trade tensions. Automakers also advanced after Mercedes-Benz Group AG posted strong earnings, signaling confidence in its cash flow despite persistent trade challenges.

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On the geopolitical front, President Trump suggested that the U.S. may reduce tariffs imposed on Chinese imports related to the fentanyl dispute, signaling an effort to de-escalate tensions ahead of a meeting of global leaders on Thursday.

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According to The Wall Street Journal, Trump is considering cutting the tariff on certain Chinese goods from 20% to 10%. In another encouraging sign, China recently purchased at least two shipments of U.S. soybeans its first reported buying spree this season suggesting progress in trade relations.

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Even with Wednesday’s gains and a generally upbeat tone in global equities, some strategists warned about the market’s narrow leadership. In Europe, the Stoxx 600 index advanced, but more than half of its components ended lower, echoing a similar pattern seen in Tuesday’s S&P 500 session.

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“From an investment perspective, while the U.S. equity story remains ‘bullish with conviction,’ maintaining this upward momentum will demand patience and prudent risk management,” wrote Linh Tran, market analyst at XS.com. “Monetary policy shifts, trade developments, and corporate earnings will serve as the key drivers shaping the next stage of the market’s direction.”

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In short, investors are riding a wave of AI-driven enthusiasm supported by favorable monetary expectations and improving U.S.-China trade dynamics. Yet, with major tech earnings on deck and the Fed’s policy decision looming, markets may face a new round of volatility before determining whether this record rally still has room to run.

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