Nvidia Surpasses $1 Trillion Market Cap, Leading the Tech Rally
In a historic trading session, Nvidia’s shares jumped 3.9%, making it the first chipmaker to close with a market capitalization exceeding $1 trillion. This milestone was achieved following an underwhelming update on artificial intelligence strategy from its smaller competitor, Advanced Micro Devices, which saw a drop of 3.6%.
Modest Rise in Consumer Price Index Fuels Market Optimism
The U.S. Labor Department reported a modest 0.1% rise in the consumer price index (CPI) last month, following a 0.4% increase in April. This modest rise in inflation has boosted market optimism, leading to a positive movement in stocks. Year-on-year, headline inflation rose by a less-than-expected 4.0%, reflecting a decrease in the cost of energy products and services, including gasoline and electricity.
Federal Reserve Expected to Hold Interest Rates Steady
The modest inflation data has led to increased speculation that the Federal Reserve may hold off on raising interest rates. Market participants have priced in a 93% chance that the U.S. central bank will maintain interest rates at the 5%-5.25% range on Wednesday, and a 62% probability of a 25-basis-point hike in July.
Chinese Companies See Boost as Central Bank Lowers Short-Term Lending Rate
U.S.-listed shares of Chinese companies also saw a boost after China’s central bank lowered its short-term lending rate for the first time in 10 months. Alibaba Group saw a gain of 1.9%, and JD.com jumped 3.5%.
The S&P 500 and Nasdaq indices hit their highest closing figures in 14 months, largely driven by gains in market heavyweights such as Apple Inc, Nvidia Corp, and Tesla Inc. More recently, sectors such as energy and materials, as well as small-cap stocks, have seen an upward trend.