AI Hype, Fed Hopes, and Trade Buzz Power Markets to the Edge of Euphoria

Markets are riding a wave of optimism as hopes for a U.S.-China trade deal and potential interest rate cuts by the Federal Reserve fuel investor confidence. Major indexes like the Nasdaq 100 and S&P 500 are approaching record highs, driven by enthusiasm around artificial intelligence, strong tech earnings, and easing inflation concerns. At the center of this momentum is Nvidia, which has soared past Microsoft to become the world’s most valuable company. Still, with mixed economic data and cautious Fed messaging, questions remain about how long the rally can last.

Markets Climb on Trade Hopes and Fed Cut Buzz

Global stock markets rose as hopes for a U.S.-China trade deal and expectations of interest rate cuts by the Federal Reserve boosted investor confidence. The Nasdaq 100 hit another record high, and the S&P 500 moved closer to one. A new trade understanding between the US and China and progress on US tax negotiations also helped lift market sentiment.

Investors are betting the Fed will cut rates at least twice this year, especially after weak US economic data showed slower consumer spending and rising unemployment claims. However, analysts warn that if economic growth stays weak or company profits disappoint, the current rally might not last.

Meanwhile, copper prices surged due to concerns about supply shortages, and Tokyo’s inflation slowed. In Asia, Japanese stocks rose, but Chinese markets fell due to poor profit data. Overall, markets are optimistic for now, but uncertainty remains.

Fed Signals: No July Rate Cut, Patience Still the Plan

Most Federal Reserve officials, including Chair Jerome Powell, are not ready to cut interest rates at their next meeting in late July. While inflation has cooled and the job market is showing some signs of softening, many Fed members want to wait for more data—especially on the impact of new tariffs—before making any changes.

Some officials say a rate cut could happen in the fall if inflation stays low, but for now, the message is clear: they’re being cautious. The Fed wants to make sure price pressures won’t return before taking any action to lower borrowing costs.

Wall Street Chases Risk as Tech Fever Heats Up

Investors are rushing into riskier parts of the stock market, especially tech and other high-volatility stocks, as the S&P 500 nears a record high. Despite ongoing concerns like tariffs, a slowing economy, and global tensions, many are ignoring the risks and betting big on momentum plays like AI and large-cap tech.

This wave of optimism is being led by individual investors who are buying dips and focusing on stocks with the biggest potential gains. Meanwhile, smaller companies are lagging behind, as tech-heavy giants dominate market performance and drive much of the profit growth this year.

Technical Analysis

Following a rebound from the April 7 low of 86.28, NVIDIA maintains a bullish bias, trading above the 20- and 50-period EMAs. Momentum indicators support this view, with the Momentum oscillator holding above 100 and the Relative Strength Index (RSI) staying above 50. However, a negative divergence between price and momentum signals a potential pause or correction. Key resistance levels are 156.37, 160.03, 170.52, and 177.01, while support levels to watch include 145.83, 137.06, and 128.80.

Nvidia Tops the World as AI Boom Fuels Record-Breaking Surge

Nvidia’s stock is climbing again after hitting a new all-time high, making it the world’s most valuable company with a market cap of about $3.77 trillion—surpassing Microsoft. Its rapid rise, adding $1.5 trillion since April, is fueled by strong demand for its AI chips and impressive earnings.

Conclusion

Investor enthusiasm, fueled by AI-driven tech growth, trade optimism, and hopes for Fed rate cuts, has pushed markets near record highs. Nvidia’s meteoric rise underscores the current appetite for risk and innovation. However, with mixed economic signals and the Fed urging caution, the path ahead may not be as smooth. While momentum remains strong, staying alert to shifting fundamentals will be key in navigating what comes next.