Nvidia starts $5 trillion club, Fed cuts rates, Wall Street retreats; ASX set to slide
Meanwhile, the barrage of major US companies reporting how much profit they made over the summer continues. There is pressure to deliver growth because it is a way to silence criticism that stock prices have risen too much in recent months.
Teradyne gained 19.4 percent, the biggest gain in the S&P 500, after the company, which produces automatic test equipment and advanced robotic systems, announced stronger profits than analysts expected in the last quarter. CEO Greg Smith noted the power of AI applications and said, “Demand for AI-related testing remains strong.”
Nvidia, the darling of the market, has established a new club.Credit: access point
Meanwhile, Nvidia gained 2.4 percent in value. Just three months after AI became the first company to break the $4 trillion mark, it became the first company valued at $5 trillion on Wall Street.
Even Caterpillar, known for its construction and mining equipment, is feeling a boost thanks to artificial intelligence. It rose 11.4 percent in the last quarter, following a stronger profit and revenue report than analysts expected. The strongest growth came from Caterpillar’s business, which provides equipment to large data centers that power artificial intelligence.
On the losing side of Wall Street was Fiserv, with a decline of 43.8 percent. The payments and financial technology company reported weaker profits than analysts expected in the latest quarter, cut its profit forecast for the year and revamped its board and leadership team. The stock is heading for its worst day since it began trading in 1986.
Mondelez International fell 5.1 percent despite reporting stronger results than analysts expected. The company, whose brands include Oreo cookies and Toblerone chocolate, is struggling with high inflation due to the cost of cocoa. Challenging conditions are expected to continue in some markets, but cocoa price increases are expected to be moderate.
In foreign stock markets, following the strong closing in Asia, indices in Europe followed a mixed course.
Tokyo’s Nikkei 225 index rose 2.2 percent to another record high. The Kospi index in Seoul rose 1.8 percent to an all-time high after President Donald Trump met with the South Korean leader following his visit to Japan.
Stocks rose 0.7 percent ahead of the meeting between Trump and Chinese leader Xi Jinping in Shanghai. The world’s two largest economies are locked in an escalating trade war, with Washington imposing high tariffs and tightening technology controls and China retaliating with curbs on rare earth shipments, a key source of leverage.
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In the bond market, the yield on the 10-year Treasury note rose to 4.05 percent from 3.99 percent late Tuesday as traders reduced their bets for a rate cut in December.
The Fed has warned it may have to pause cuts if inflation rises above its still-high level; because lower rates could worsen inflation.
The US government shutdown is making an already difficult process even more difficult for Fed officials. This delayed important updates on the economy that would normally help guide the Fed’s decision-making.
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