Nasdaq 100: Nvidia, Tesla, Alphabet Drive Tech Surge Past 20,000 on Rate-Cut Hopes

What’s Driving the Market Today?

The Nasdaq Composite surpassed 20,000 points for the first time Wednesday, fueled by a strong rally in technology stocks and renewed hopes for a Federal Reserve rate cut at its December meeting. Inflation data for November aligned with expectations, boosting investor sentiment and reinforcing confidence in looser monetary policy.

The S&P 500 gained 0.9%, while the Dow Jones Industrial Average added 0.1%, with tech stocks leading the charge.

Nvidia and Tesla Lead Tech Gains

Technology was the top-performing sector, with the Technology Select Sector SPDR Fund (XLK) rising over 1% and extending its year-to-date gains to more than 24%. Nvidia added 3%, building on its remarkable 181% rally for the year. Tesla also climbed over 3%, bringing its year-to-date increase to 67%.

Alphabet shares rose for the second consecutive day, buoyed by the announcement of Google’s quantum computing breakthrough. Meanwhile, Meta and Amazon joined the tech rally, contributing to the Nasdaq’s historic ascent.

Retail and Consumer Discretionary Stocks Make Moves

Consumer discretionary stocks showed strength, supported by holiday season optimism. Stitch Fix soared 44% after raising its second-quarter revenue outlook and increasing its full-year guidance. GameStop surged 9% after reporting an unexpected third-quarter profit, marking a turnaround from last year’s loss.

Macy’s, however, fell over 4% after lowering its fiscal-year earnings outlook, citing weaker-than-expected performance during key shopping periods.

Energy and Industrials: Mixed Performance

Energy stocks lagged, with the sector down 0.1%. Oil prices remained range-bound, providing limited upside for producers. Industrials showed modest gains, with GE Vernova rising over 6% after announcing a 25-cent dividend and a $6 billion share buyback program. The company also revised its 2028 margins forecast upward, boosting investor confidence.

General Motors declined 1.5% after announcing it would cease development of its Cruise robotaxi division, reflecting a strategic pivot in capital allocation amid rising competition in autonomous vehicles.

Inflation Data Keeps Rate-Cut Hopes Alive

November’s Consumer Price Index (CPI) rose 0.3% from the previous month and 2.7% year-over-year, in line with forecasts. Core CPI, excluding food and energy, increased 3.3% annually. While slightly faster than October’s pace, the report eased concerns about stubborn inflation.

The CME FedWatch Tool now places a 96% probability on a Federal Reserve rate cut next week, reinforcing optimism in equity markets. “With inflation data meeting expectations, the Fed is on track to ease monetary policy, which is supporting market gains,” said Tom Hainlin, senior investment strategist at U.S. Bank Asset Management.

Market Forecast: Where Could the Market Be Headed Next?

The Nasdaq’s record-breaking close suggests a bullish near-term outlook, underpinned by strong tech performance and favorable monetary policy expectations. Leaders like Nvidia, Tesla, and Alphabet are likely to sustain market momentum, with broader support from retail and industrials.

However, potential headwinds in energy and regulatory challenges for healthcare and financials warrant caution. As the year draws to a close, the market appears positioned for further gains, but traders should remain vigilant for any surprises.

More Information in our Economic Calendar.