Key Players: Nvidia, Intel, and the Federal Reserve
On Thursday, major indices on Wall Street closed at record highs following the Federal Reserve’s decision to cut interest rates by a quarter percentage point the previous day. This upward trend was further fueled by Nvidia’s announcement of a $5 billion investment in struggling chip manufacturer Intel.
Nvidia’s Rebound and Intel’s Surge
Nvidia recovered from its losses on Wednesday after a report suggested Chinese tech companies might stop purchasing their chips. This led to Intel’s stock soaring, its largest daily gain since 1987, while competitor Advanced Micro Devices fell.
These movements propelled the Nasdaq, heavily weighted towards technology, and the technology sector of the S&P 500, driving the broadest semiconductor index higher.
- S&P 500: Increased by 31.61 points (0.48%) to 6,631.96
- Nasdaq Composite: Rose by 209.40 points (0.94%) to 22,470.73
- Dow Jones Industrial Average: Gained 124.10 points (0.27%) to 46,142.42
The Russell 2000 small-cap index also gained, reaching an intraday high of 2,466 points for the first time since November. These companies are expected to perform better in a low-interest-rate environment.
Federal Reserve’s Influence on Market Sentiment
Federal Reserve Chair Jerome Powell emphasized on Wednesday that labor market weakness was a priority for the central bank. He hinted at further interest rate cuts during their October and December meetings.
Data showed a decrease in new US unemployment benefit applications the previous week, but the labor market has softened due to reduced demand and supply of workers.
The interest rate cut is expected to contribute to Wall Street’s recent rally, driven by expectations of monetary easing and AI-based trading resumption. Investors anticipate a 44.2 basis point cut by the end of 2025, according to data compiled by LSEG.
Key Questions and Answers
- Q: Who are the key players in this news? A. The key players are Nvidia, Intel, and the Federal Reserve.
- Q: What caused Wall Street indices to reach record highs? A. The Federal Reserve’s interest rate cut and Nvidia’s investment in Intel drove the market upward.
- Q: How did Nvidia and Intel stocks perform? A. Nvidia recovered from losses, while Intel experienced its largest daily gain since 1987.
- Q: What impact did the Federal Reserve’s statement have on the market? A. The Fed’s emphasis on labor market weakness and hint of further interest rate cuts contributed to the positive market sentiment.
