US stock markets have surged as investors anticipate the US Federal Reserve will hint at upcoming interest rate cuts.
All three major US stock indexes rose, led by the tech-heavy Nasdaq, fueled by renewed enthusiasm for AI companies.
The Nasdaq Composite increased by 2.3%, while the S&P 500 gained 1.3%, driven by Nvidia’s 10.7% rise after a 7% drop the previous day.
The rally was sparked by Advanced Micro Devices, which jumped 7.5% after reporting better-than-expected profit and revenue for the latest quarter, bolstered by its accelerating artificial intelligence business.
Federal Reserve policymakers are expected to maintain interest rates at a 23-year high at their meeting later today.
However, traders have already priced in a potential rate cut in September and will be looking for hints during the press conference following the meeting.
Julien Lafargue, chief market strategist at Barclays Private Bank, said, “We expect the US Federal Reserve to open the door to a first interest rate cut in September.”
Similarly, money markets have also priced in a potential rate cut by the Bank of England by September, with traders betting on a 63% chance that policymakers will announce a reduction from 5.25% to 5% tomorrow.
