Nasdaq Index Today: Nvidia Powers Tech Rally as Upcoming Fed Meeting Sparks Rate Cut Hopes

U.S. Stock Futures Rise as Inflation Data Settles Market Nerves

U.S. stock futures edged higher on Thursday as traders assessed new inflation data following a volatile session.

At 12:58 GMT, Dow Futures are trading 40969.00, up 63.00 or +0.15%. The S&P 500 Index is at 5570.25, up 9.00 or +0.16% and Nasdaq Futures are trading 19284.00, up 13.00 or +0.07%.

On Wednesday, major indices rebounded from sharp declines, with the S&P 500 gaining 1.07%, despite dropping over 1% intraday. Similarly, the Dow Jones Industrial Average rose by 124.75 points or 0.31%, after earlier losing more than 700 points. The Nasdaq Composite outperformed with a 2.17% rise, recovering from a similar decline. A late-session rally in technology shares, driven by Nvidia’s impressive gains, helped offset the day’s losses.

Producer Price Index Reflects Inflation Stability

Investors’ attention shifted to the latest producer price index (PPI), which showed a 0.2% rise in wholesale prices for August, aligning with economists’ expectations. The PPI, an important measure of inflation, provided reassurance to the markets, especially as core inflation—which strips out volatile food and energy prices—also ticked up by 0.2%. This followed Wednesday’s consumer price index (CPI) release, which reported a 0.2% increase in headline inflation but a slightly higher-than-expected 0.3% rise in core inflation.

These inflation readings come as investors weigh the potential impact on Federal Reserve policy. The Federal Open Market Committee (FOMC) is set to meet on September 17-18, with many traders expecting an interest rate cut. However, opinions are split over whether the Fed will opt for a 25 or 50-basis-point reduction. While some believe a larger cut could boost market sentiment, others warn it could introduce additional risks.

Treasury Yields Dip as Traders Eye Fed Decision

Treasury yields moved slightly lower on Thursday as traders digested the inflation data. The yield on the 10-year Treasury note declined by less than one basis point to 3.646%, while the 2-year Treasury yield dropped by nearly 3 basis points to 3.616%. Lower yields suggest a more cautious outlook as the market anticipates the Fed’s next move.

Meanwhile, weekly jobless claims came in at 230,000, slightly higher than the 225,000 forecasted by economists. Although this deviation was modest, it added to the broader picture of an economy grappling with mixed signals on inflation and employment.

Nvidia Leads Tech Rally, Boosts Broader Market

Nvidia once again played a pivotal role in bolstering the broader market. The chipmaker’s stock rose 0.9% in premarket trading on Thursday, extending Wednesday’s 8.15% rally. CEO Jensen Huang’s remarks on the company’s robust demand during the Goldman Sachs Communacopia + Technology Conference provided a significant boost. Nvidia’s continued success helped reignite confidence in the tech sector, propelling the Nasdaq higher in the previous session.

Market Outlook: Fed Decision Looms Large

As traders look ahead to the Federal Reserve meeting next week, market sentiment is likely to hinge on expectations of interest rate cuts. A 25-basis-point reduction seems the most probable outcome, but a larger 50-basis-point cut could surprise markets. While inflation appears to be stabilizing, the slight uptick in core inflation might push the Fed to take a cautious approach, which could lead to subdued market movements in the short term. Traders should brace for potential volatility depending on the Fed’s stance.

E-mini S&P 500 Index futures are taking on a bullish complexion after crossing to the bullish side of the 50-day moving average at 5539.11. The index is also trading on the strong side of a pivot cluster at 5420.50 – 5395.00. There is no resistance until 5669.75 so the market has room to run.