Stocks Climb on Fed Day as Nvidia Hits $5 Trillion: Markets Wrap

(Bloomberg) — Wall Street traders looked past concerns about elevated technology valuations, with the high-profile industry driving stocks toward a fresh record as prospects for another Federal Reserve rate cut bolsters the outlook for corporate earnings.

A renewed tech rally sent the S&P 500 up for a fifth straight day, putting the gauge on track for its longest streak of monthly gains since 2021. While there have been worries about narrowing breadth that could jeopardize the advance in the near term, confidence in the outlook for artificial intelligence kept powering tech megacaps and the broader market.

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With optimism about AI running rampant, Nvidia Corp. became the first $5 trillion company as President Donald Trump said he’ll discuss the Blackwell processors with China’s Xi Jinping. Chief Jensen Huang has recently announced various partnerships, dismissing AI bubble talk.

Updates on spending and progress developing the technology are what investors most want to see when tech giants report earnings this week. Microsoft Corp., Alphabet Inc. and Meta Platforms Inc. kick things off with their results Wednesday, with Amazon.com Inc. and Apple Inc. following on Thursday.

“This week’s big tech earnings may be the most important in recent memory since many investors are skeptical about the stock market’s rally,” said David Laut at Kerux Financial.

Before that, the Fed is expected to cut rates by a quarter percentage point and Chair Jerome Powell will likely offer little guidance amid a divide among policymakers. Fed watchers also see a high chance officials will halt the runoff of Treasury securities from the $6.6 trillion balance sheet at this meeting.

The S&P 500 topped 6,900. While tech led gains once again, over 300 shares fell. Nvidia rose 3.5%. The yield on two-year Treasuries rose one basis point to 3.50%. The dollar wavered. Gold jumped.

While the upward momentum in large-cap technology and growth continues, the diverging breadth and underperformance in small- and mid-cap stocks raise concerns about the sustainability of the recent stock market’s advance, according to Craig Johnson at Piper Sandler.

“Investors must remain vigilant within the current uptrend, especially as volatility will likely increase with earnings results and Fed commentary,” he said.

In fact, the previous session was really quite unusual. Since 1990, the S&P 500 has never had an up day with weaker breadth than Tuesday, according to Bespoke Investment Group strategists.

“When we look at this setup against overbought chart conditions which extend across multiple time frames, it continues to imply the potential for elevated volatility into year-end 2025,” said Dan Wantrobski at Janney Montgomery Scott.

While Wantrobski is still looking for the S&P 500 to hit the 7,000 mark this year – with an intermediate-term target toward 7,400 – he notes that markets are still vulnerable to “air pockets, some of which could prove pretty nasty.”

“We think November may be a target, despite its reputation as one of the best months for stocks,” he said.

Technology’s weight in the S&P 500 has been trending higher since the 1970s, and the sector currently makes up a record share of the index, according to Rob Anderson at Ned Davis Research.

Relative to the long-term trend, the move looks less extreme compared to 2000, he noted. However, the reading is still well into the top quintile of all observations, consistent with sector underperformance one, three, five, and 10-years later, on average.

“It often pays to go against the crowd when sentiment reaches an extreme” and then reverses, which has not yet occurred, he said. “However, the reading suggests risk is elevated for the sector,” Anderson said.

Despite lofty expectations embedded in the stock prices of the members of the “Magnificent Seven” megacaps, market resilience continues, noted Mark Hackett at Nationwide.

“Investors are choosing to participate rather than wait on the sidelines,” he said. “Broader earnings participation and margin strength should help deliver more balanced performance across sectors, reinforcing the case for diversification.”

“Investors are experiencing one of the most commanding momentum-driven markets since the Internet,” said Eric Teal at Comerica Wealth Management. “The AI innovation is viewed as transformative, and the markets forward multiple is reflective of this optimism.”

While technology has sourced the bulk of the market returns and most of the earnings growth, aa Fed easing cycle is now serving as an additional catalyst to spur valuations higher, he said.

Traders have fully priced a quarter-point rate reduction when the Fed announces its decision at 2 p.m. in Washington, with another likely in December. But they will be focused on Powell’s remarks to determine their next move.

Treasuries have largely been stuck in a range in recent days amid a data vacuum resulting from the US government shutdown. The ICE BofA Move Index, a gauge of Treasury volatility, is hovering near levels last seen during the pandemic.

“We expect a total of three 25 basis-point cuts this year, followed by further easing in 2026,” said Seema Shah at Principal Asset Management. “Overall, this should be a gentle cycle, offering enough stimulus to stabilize the labor market and support more vulnerable sectors.”

Corporate Highlights:

Boeing Co. announced a $4.9 billion accounting charge and delayed debut for its 777X jetliner, a reminder of the long recovery ahead for the US planemaker even as rising aircraft deliveries bolster its cash. Caterpillar Inc. posted stronger-than-expected earnings and revenue on the back of surging demand from AI data centers for its power-generation equipment. Kraft Heinz Co. lowered its sales outlook as its chief executive officer said that the feeling of US shoppers has fallen to historic a low. Verizon Communications Inc., the nation’s largest mobile-service provider, reported gains in revenue and profit in the third quarter as a new chief executive officer laid out an aggressive growth strategy to reclaim market share. CVS Health Corp. raised its 2025 profit guidance for a third time in less than six months, a sign that it’s set a new foundation a year into Chief Executive Officer David Joyner’s tenure following challenges in its insurance business. Paramount Skydance Corp. began a planned round of job cuts involving 1,000 workers on Wednesday as part of an effort to slash $2 billion in costs following its August merger with Skydance Media. More cuts are expected at a later date. Fiserv Inc. plunged after the fintech slashed its outlook for full-year earnings and unveiled third-quarter results that confounded Wall Street analysts. Centene Corp.’s third-quarter profit surpassed Wall Street expectations and the health insurer raised its outlook, a potential sign of relief for investors after the company’s profit view collapsed earlier this year. Caesars Entertainment Inc., a major operator of resort casinos, reported third-quarter results that fell short of Wall Street estimates. Edison International’s executives said the company’s equipment will likely be found to be associated with triggering the deadly Eaton Fire in Los Angeles. Uber Technologies Inc. is preparing to offer driverless rides on vehicles developed by Lucid Group Inc. and Nuro Inc. in the San Francisco Bay Area for the first time next year, thrusting the company into direct competition with Waymo’s robotaxi service. Thermo Fisher Scientific Inc. agreed to acquire Clario Holdings Inc., a privately held maker of drug trial software, for about $8.9 billion in cash. Online marketplace Etsy Inc. will elevate Chief Growth Officer Kruti Patel Goyal to the CEO job, entrusting the company veteran with navigating the artificial intelligence era and lifting the marketplace out of a post-pandemic slowdown. UBS Group AG results failed to dispel investor anxiety about risks from previously canceled Credit Suisse bonds, the potential impact of Swiss capital reforms and the lender’s involvement in the First Brands bankruptcy, overshadowing a set of earnings that broadly beat expectations. Deutsche Bank AG exceeded analyst estimates for fixed-income trading, giving tailwind to Chief Executive Officer Christian Sewing just a couple of weeks before he presents a new strategy. Banco Santander SA posted third-quarter results that beat analysts’ estimates as profit jumped in the US and provisions for souring loans remained contained. GSK Plc raised its profit and sales forecasts for the year, aided by its HIV and immunology medicines, in Emma Walmsley’s last report as chief executive officer. Mercedes-Benz Group AG confirmed its annual outlook and plans to proceed with a €2 billion ($2.3 billion) share buyback after the company’s automaking margin climbed in the third quarter. SK Hynix Inc. reported a 62% jump in profit and revealed it’s sold its entire memory chip lineup for next year, illustrating how a global AI infrastructure buildout is ratcheting up sector-wide demand. Indonesia’s GoTo Group raised its earnings forecast for the year, a sign that new initiatives and cost cuts to cope with fierce competition in the ride-hailing and delivery market are paying off. Some of the main moves in markets:

Stocks

The S&P 500 rose 0.2% as of 12 p.m. New York time The Nasdaq 100 rose 0.3% The Dow Jones Industrial Average rose 0.5% The Stoxx Europe 600 fell 0.1% The MSCI World Index rose 0.1% Bloomberg Magnificent 7 Total Return Index rose 0.6% The Russell 2000 Index rose 0.7% Currencies

The Bloomberg Dollar Spot Index was little changed The euro rose 0.1% to $1.1664 The British pound fell 0.2% to $1.3243 The Japanese yen rose 0.1% to 151.92 per dollar Cryptocurrencies

Bitcoin fell 1.2% to $111,524.64 Ether fell 0.7% to $3,951.22 Bonds

The yield on 10-year Treasuries advanced two basis points to 3.99% Germany’s 10-year yield was little changed at 2.62% Britain’s 10-year yield was little changed at 4.40% The yield on 2-year Treasuries advanced one basis point to 3.50% The yield on 30-year Treasuries advanced two basis points to 4.56% Commodities

West Texas Intermediate crude rose 1.2% to $60.88 a barrel Spot gold rose 1.1% to $3,995.41 an ounce ©2025 Bloomberg L.P.