Tech Surge Leads S&P 500 and Dow Jones to Record Highs as Nvidia Soars, Gold Rally Pauses | Daily Market Analysis

Key events:

• USA - New Home Sales (Aug)
• USA - Crude Oil Inventories

On Tuesday, the S&P 500 and Dow Jones both closed at record highs, brushing off consumer concerns about the economy as Nvidia powered a surge in tech stocks.

The S&P 500 rose 0.3%, closing at a new high of 5,735.66, while the NASDAQ Composite increased by 0.6%. The Dow Jones Industrial Average added 83 points, or 0.2%, reaching a record close at 42,208.22.

Nvidia (NASDAQ: NVDA) surged nearly 4%, boosting the broader tech sector. Despite reports that Nvidia halted orders for its H20 chips to comply with US restrictions on semiconductor exports to China, the stock continued its upward trend.

Boeing (NYSE: BA) saw its stock drop 0.9% after offering a revised labor deal to over 30,000 striking workers in the Pacific Northwest. The deal includes a 30% pay raise over four years, improved retirement benefits, and a higher ratification bonus if the proposal is accepted by Friday. Boeing called this its "best and final" offer.

The USD/JPY pair remained steady around 143.20 during Wednesday's early Asian session, despite a weakened US Dollar. Anticipation of a significant rate cut by the US Federal Reserve in November could continue to weigh on the pair.

Federal Reserve Governor Michelle Bowman remarked on Tuesday that inflation remains "uncomfortably above" the Fed’s 2% target, advising caution with rate cuts. She expressed preference for a quarter-point cut, consistent with typical Fed moves.

Fed Governor Adriana Kugler is scheduled to speak on Wednesday, with the US Personal Consumption Expenditures (PCE) Price Index due on Friday. Dovish comments or softer inflation data could further weaken the USD against the JPY.

The Conference Board reported Tuesday that US consumer confidence dropped to 98.7 in September, down from a revised 105.6 in August, marking the steepest decline since August 2021.

Meanwhile, speculation that the Bank of Japan is in no rush to raise interest rates may continue to pressure the JPY. BoJ Governor Kazuo Ueda stated that the central bank is cautiously monitoring global markets before making policy decisions.

The Australian Dollar pared gains against the US Dollar on Wednesday following a weaker-than-expected Monthly Consumer Price Index report. However, it remained supported by China’s new stimulus measures.

The Reserve Bank of Australia kept its Official Cash Rate steady at 4.35% on Tuesday. RBA Governor Michele Bullock confirmed that rates would remain on hold for now, clarifying that a rate hike was not discussed in the latest meeting.

China’s central bank, the People’s Bank of China, also introduced new measures on Tuesday, including a 50-basis-point reduction in the reserve requirement ratio, a cut in the seven-day repo rate to 1.5%, and a reduction in down payments for second homes to 15%. The PBOC also lowered the one-year Medium-term Lending Facility (MLF) rate to 2.0%.

The New Zealand Dollar extended gains for the third consecutive session on Wednesday, trading around 0.6340. It reached a nine-month high of 0.6355 earlier, supported by expectations of increased foreign currency inflows due to China’s stimulus measures.

Gold prices rallied to the $2,664-2,665 range on Tuesday, setting another record high, amid expectations of aggressive Federal Reserve easing and rising geopolitical tensions in the Middle East. The weak US Dollar, driven by disappointing US data, provided further support for gold.

However, gold bulls paused during the Asian session on Wednesday, as the metal appeared slightly overbought. Investors remained cautious ahead of speeches by Fed officials, including Chair Jerome Powell on Thursday. Friday's release of the US PCE Price Index may shape expectations for Fed rate cuts and determine the next move for gold.