By Mike Dolan
(Reuters) -What matters today in the US and world markets
By Mike Dolan, Managing Editor of Finance & Markets
Buoyed by another wave of AI deals and earnings enthusiasm and with interest rates poised to fall again, Wall Street now faces two days of critical events in monetary policy, earnings and global trade that will test the week’s optimism.
Despite months of concern about potential bubbles in the AI ​​gold rush, the world’s most valuable stock, AI chip giant Nvidia, is poised to surpass $5 trillion in market value for the first time at the market open on Wednesday, just three months after it crossed the $4 trillion mark. Microsoft and Apple are now also above or flirting with a $4 trillion market cap.
The top four US megacaps now have a market value higher than the entire European STOXX 600 index, which is just under $14 trillion.
Nvidia shares rose 5% on Tuesday and another 2.8% in premarket trading today after CEO Jensen Huang announced $500 billion in orders for artificial intelligence chips and plans to build seven supercomputers for the US government.
And with optimism rising this week over some de-escalation in the trade war at Thursday’s crucial summit between President Donald Trump and Chinese President Xi Jinping in South Korea, Trump praised Nvidia’s flagship Blackwell model as a “super duper chip” and said he might talk to Xi about it after on-again, off-again curbs on technology exports this year.
Meanwhile, Microsoft, Meta and Alphabet report earnings updates after Wednesday’s market close and Apple and Amazon are due out on Thursday. Microsoft shares rose 2% on Tuesday after OpenAI and OpenAI announced a restructuring that frees the ChatGPT maker to move away from its nonprofit roots and go public, allowing it to fund CEO Sam Altman’s ambitious plans to develop data centers and cutting-edge technology.
With optimism about AI in full swing, the technology’s potential downside was also evident this week, with broad job cuts announced by companies like Amazon and UPS. With no official economic data yet due to the government shutdown, a preliminary estimate from an ADP National Employment Report showed the U.S. economy added an average of 14,250 jobs in the four weeks ending Oct. 11.
And it’s labor market weakness that will likely keep the Federal Reserve cutting interest rates later Wednesday, this time by another quarter point, to below 4% for the first time in three years. Investors will also be watching for an announcement about the end of its balance sheet, the so-called “quantitative tightening.”
Despite another heavy week of new debt sales, Treasury yields were subdued ahead of the decision, and the MOVE gauge of bond market volatility fell to its lowest level in four years this week. The dollar was slightly firmer.
And with AI driving mega-caps, Wall Street index futures rose again before the bell today after hitting all-time closing highs on Tuesday.
Elsewhere, the Bank of Canada is also expected to cut its interest rates today by a quarter point. Tomorrow’s decisions from the European Central Bank and the Bank of Japan are expected to leave policy there unchanged.
In the middle of the European earnings season, Deutsche Bank rose 1% after its positive results, but UBS fell 1% despite a 74% increase in its net profit, which exceeded forecasts.
In today’s column, I discuss the latest collapse in U.S. Treasury bond volatility and how it faces crisis warnings throughout the year.
Today’s market minute
* Donald Trump and South Korean President Lee Jae Myung finalized details of their complicated trade deal at a summit in South Korea on Wednesday, and the U.S. president also struck an optimistic note about an imminent summit with China’s Xi Jinping. * Nvidia (NVDA.O), open a new tab was poised to make history on Wednesday by becoming the first company to reach a market value of $5 trillion, extending a powerful rally that has cemented its place at the center of the artificial intelligence boom. * Saudi Arabia is preparing to shift its $925 billion sovereign wealth fund away from a focus on real estate gigaprojects that have dominated its development goals for the past decade, a source with direct knowledge of the plans told Reuters. * With Wall Street scaling new highs and five of the “Magnificent Seven” US tech giants reporting earnings this week, investor attention is once again focused on record stock market concentration and the risks associated with it. But, writes ROI markets columnist Jamie McGeever, this concern may be overblown. * Chinese iron ore imports are on track for another strong month in October, following record arrivals in September, with strength in stark contrast to weak steel production. Read the latest from ROI Asia commodities columnist Clyde Russell.
chart of the day
Nvidia was set to make history on Wednesday by becoming the first company to reach a market value of $5 trillion, extending a powerful rally that has cemented its place at the center of the artificial intelligence boom. President Donald Trump said he will speak with Chinese President Xi Jinping about Nvidia’s next-generation Blackwell AI chip at their meeting scheduled for Thursday. The US company’s sales of high-end artificial intelligence chips to China, which accounted for 13% of its revenue in the last financial year, have been a key point in protracted trade talks between the world’s two largest economies this year.
Today’s events to watch
* US Federal Reserve Federal Open Market Committee policy decision (2:00 p.m. EDT), with Fed Chair Jerome Powell’s press conference (2:30 p.m. EDT)
* Bank of Canada interest rate decision (9:45 amEDT)
* US Corporate Earnings: Microsoft, Meta, Alphabet, eBay, MGM, Boeing, Caterpillar, Equinix, Sales, Verizon, Kraft Heinz, Everest, Starbucks, CVS, Centene, Align, GE Healthcare, Tyler, Fiserv, Masco, Cognizant, AvalonBay, ADP, Otis, Chipotle, DaVita, Garmin, Rollins, Dayforce, ServiceNow, NiSource, KLA, Smurfit Westrock, American Water Works, American Electric EnergÃa, Phillips 66, IDEX, Fortive, TE, Verisk, Generac, CH Robinson, Extra Space, Public Storage, Essex Property, Entergy, UDR
* US Treasury sells 2-year floating rate notes
* US President Donald Trump visits South Korea
Want the Morning Deal delivered to your inbox every weekday morning? Subscribe to the newsletter here. You can find ROI on the Reuters website and you can follow us on LinkedIn and X.
The opinions expressed are those of the author. They do not reflect the views of Reuters News, which, in accordance with the Trust Principles, is committed to integrity, independence and freedom from bias.
(By Mike Dolan; Editing by Allison Williams)
