(Bloomberg) — A rally in several big techs spurred a rebound in stocks, with Nvidia Corp. briefly hitting $4 trillion. Treasuries climbed after a solid $39 billion sale while minutes from the Federal Reserve’s latest meeting showed officials remained split around how tariffs would impact inflation.
Equity traders brushed off trade angst to send the S&P 500 closer to its all-time highs. While the equity benchmark came off session highs, a gauge of megacaps added 1% as the giant chipmaker became the first company to reach that milestone. Nvidia plans to launch a new artificial-intelligence chip designed for China as soon as September — with chief Jensen Huang planning a visit to the Asian nation, according to the Financial Times.
The Treasury market snapped a five-day selloff, with 10-year yields down six basis points to 4.34% after a sale of the maturity. Wednesday’s auction was awarded at 4.362% versus a 4.365% when-issued yield at the 1 p.m. New York time bidding deadline. That’s the second in a trio of auctions that will culminate in an offer of longer-term debt Thursday.
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President Donald Trump unveiled a new round of tariff demand letters from Iraq to Philippines, with levies set to hit in August on imported goods from partners who fail to reach agreements with the US. Brazil’s real led losses in major currencies as Trump said the South American nation hasn’t been good to the US — adding that tariffs should be released by tomorrow morning.
“We believe the setup for equity markets looks bullish, even in light of renewed trade-war jitters,” said Craig Johnson at Piper Sandler. “While equities may come under some near-term pressure, investors are increasingly becoming numb to the tariff headlines and instead focusing on the trendlines.”
The emerging divide among Fed officials over the outlook for interest rates is being driven largely by differing expectations for how tariffs might affect inflation, a record of policymakers’ most recent meeting showed.
“While a few participants noted that tariffs would lead to a one-time increase in prices and would not affect longer-term inflation expectations, most participants noted the risk that tariffs could have more persistent effects on inflation,” the minutes of the Federal Open Market Committee’s June 17-18 meeting said.
To Jeff Roach at LPL Financial, the FOMC is comfortable remaining in wait-and-see mode.
“Despite headwinds, the economy continues to trudge along, giving policymakers time to assess the projected impact from tariffs,” he said. “Ever since last week’s payroll release, markets do not expect the FOMC will cut rates later this month. Next week’s inflation data will likely show a reacceleration, giving the Fed more reason to keep rates elevated. We don’t expect inflation readings will improve until later this year.”
Trump posted on social media that the Fed’s rate is “at least 3 points too high,” while reiterating his call for lower borrowing costs.
Meantime, Nvidia’s surge to the new milestone marked a stunning rebound following a rough start to the year, when spending fears sparked by China’s DeepSeek, along with Trump’s trade war, weighed on risk sentiment. The stock is up more than 1,000% since the beginning of 2023. The latest catalyst has been a commitment to AI spending from its biggest customers.
Just this week, Goldman Sachs Group Inc. strategists raised their outlook for US stocks, citing among other factors the continued strength in the largest US companies as reasons why stocks are likely to keep heading higher.
“If the script goes as planned and economic activity remains firm, corporate profitability remains solid (especially across tech), and the inevitable unexpected speed bumps in the road don’t throw the market off track too much, stocks have an opportunity to grind higher through year-end,” said Anthony Saglimbene at Ameriprise.
Yet Saglimbene remarks there’s now an elevated risk of disappointment, “especially after seeing how quickly the overall investment narrative can change based on the constant barrage of White House announcements.”
Fast-money investors are edging their way back into US stocks after sitting out a furious rally, bolstering the case for equities to extend their advance further into uncharted territory.
A BNP Paribas measure of equity positioning among investors including commodity-trading advisors, volatility-target funds and hedge funds has been steadily rising and now sits at just above neutral. That follows a monthslong rally that saw the S&P 500 Index rebound to new highs from the precipice of a bear market. The last time institutions were this light on stocks in the midst of a sharp recovery was in 2023, according to the bank.
With the S&P 500 back at cycle-high valuations and the CNN Fear & Greed Index signaling extreme greed, the market seems to be signaling a robust appetite for risk, according to Mark Hackett at Nationwide. This heightened sentiment likely reflects positive interpretation of recent data as supportive, he said.
“As we move forward, the technical tailwinds will likely begin to fade and fundamental narratives will be crucial in determining the sustainability of this bullish trend,” Hackett noted. “As the market reaction to the ebb and flow of tariff news has become muted, the next catalyst is earnings season. This handoff may come with some choppiness.”
Corporate Highlights:
- Microsoft Corp. was upgraded at Oppenheimer on Wednesday, adding to a growing consensus on Wall Street that the software giant is in a strong position within artificial intelligence.
- Apple Inc. thinks it is “too big to tariff, in some sense, and it’s used that line,” White House trade counselor Peter Navarro told Fox Business.
- France’s antitrust regulator said it notified Meta Platforms Inc. of a potential violation of competition rules relating to the online advertising sector.
- CoreWeave Inc., a cloud computing provider, said it would offer Nvidia’s RTX PRO 6000 Blackwell GPUs at scale.
- Linda Yaccarino, who was hired two years ago by Elon Musk as chief executive officer of X, is stepping down less than three months after the social-media platform was absorbed by Musk’s artificial intelligence startup.
- Merck & Co. agreed to buy respiratory drugmaker Verona Pharma Plc for around $10 billion as part of its ongoing search for ways to fill the Keytruda-sized hole that will emerge over the next few years.
- Meta Platforms Inc. bought a minority stake in the world’s largest eyewear manufacturer, EssilorLuxottica SA, deepening the US tech giant’s commitment to the fast-growing smart glasses industry, according to people familiar with the matter.
- Starbucks Corp. has received proposals from prospective investors in its China business, most of whom are eyeing a controlling stake in the operation, said people familiar with the matter.
- AES Corp., which provides renewable power to tech giants such as Microsoft Corp., is exploring options including a potential sale amid takeover interest, people with knowledge of the matter said.
- Samsung Electronics Co. introduced three new foldable smartphones in an effort to cement its grip on the category and broaden mainstream appeal before Apple Inc. debuts its first version next year.
Some of the main moves in markets:
Stocks
- The S&P 500 rose 0.4% as of 2:30 p.m. New York time
- The Nasdaq 100 rose 0.5%
- The Dow Jones Industrial Average rose 0.3%
- The MSCI World Index rose 0.5%
- Bloomberg Magnificent 7 Total Return Index rose 1%
- The Russell 2000 Index rose 0.7%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at $1.1716
- The British pound was little changed at $1.3595
- The Japanese yen rose 0.2% to 146.27 per dollar
Cryptocurrencies
- Bitcoin rose 0.8% to $109,553.59
- Ether rose 4.6% to $2,719.97
Bonds
- The yield on 10-year Treasuries declined six basis points to 4.34%
- Germany’s 10-year yield declined one basis point to 2.67%
- Britain’s 10-year yield declined two basis points to 4.61%
Commodities
- West Texas Intermediate crude rose 0.1% to $68.40 a barrel
- Spot gold rose 0.3% to $3,311.92 an ounce
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