Nasdaq 100 and S&P500: Tech Stocks Rally on Nvidia Surge, Fed Minutes in Focus Today
News Summary
On Wednesday, the S&P 500 rose 0.6% and the Nasdaq gained 0.8%, reversing the previous session's tech dip. Nvidia's stock advanced over 1% after CEO Jensen Huang's comments on substantially increased demand for computing power, effectively countering market fears of an AI valuation bubble and reigniting optimism in AI investments. However, the U.S. government shutdown entered its eighth day, and while equities have shown resilience, risks are growing. President Trump indicated that not all furloughed workers might receive back pay, and military payroll delays could emerge if the stalemate continues, potentially denting consumer sentiment and spending. Concurrently, central banks signaled caution. Traders are awaiting the Federal Reserve's September meeting minutes for clarity on internal splits regarding interest rate policy and inflation expectations. The Bank of England, in its financial stability report, warned of "stretched" valuations in AI-heavy tech names and suggested markets might be underpricing broader risks like geopolitical tensions and elevated sovereign debt, noting increased index concentration could leave equities vulnerable if AI expectations are scaled back.
Background
Against the current backdrop, there's a clear divergence in market sentiment regarding Artificial Intelligence (AI) valuations. Prior to this, Oracle's weak cloud margins had sparked fears of an AI valuation bubble. Nvidia CEO Jensen Huang's optimistic remarks directly address these concerns. Concurrently, the U.S. government shutdown has entered its eighth day, with the Senate failing to pass a stopgap funding bill, indicating an intractable political stalemate in the short term. Both the Federal Reserve and the Bank of England have recently voiced concerns about market risks and overstretched valuations in specific sectors, adding a layer of uncertainty to market sentiment.
In-Depth AI Insights
Can Nvidia's optimistic outlook sustainably counter macroeconomic headwinds and valuation concerns? - Nvidia CEO Jensen Huang's optimistic remarks on AI demand have effectively boosted market sentiment in the short term, temporarily offsetting AI bubble fears. - However, the sustainability of this optimism hinges on whether it translates into broader industry earnings growth and if AI capital expenditure can remain robust amidst macro uncertainties like high interest rates and the government shutdown. - Investors should be wary that central bank warnings (e.g., BoE) about