ORLANDO, Florida (Reuters) -TRADING DAY
Making sense of the forces driving global markets
By Jamie McGeever, Markets Columnist
The S&P 500 hit a record high on Wednesday, as Wall Street rose broadly on expectations the Federal Reserve will lower interest rates next month and on investor confidence that tech giant Nvidia's results would deliver another resounding 'beat'.
More on that below. In my column today, I look at examples of where the overt politicization of monetary policy has had severe economic and market consequences. And contrary to perceived wisdom, these have not just been in emerging markets.
If you have more time to read, here are a few articles I recommend to help you make sense of what happened in markets today.
- Fed's credibility is an asset whose decline could becostly
- The fight for the Fed reaches its decisive moment
- India hit by U.S. doubling of tariffs, plans to cushionblow
- Tariff-bolstered U.S. credit rating is still tarnished:Mike Dolan
- Investors worry Trump's Intel deal kicks off era of U.S.industrial policy
Today's Key Market Moves
- STOCKS: S&P 500 hits new high. China's benchmark indexesslump 1.5% or more. Europe flat, Britain's FTSE 100 falls for asecond day from Monday's record high.
- SHARES/SECTORS: Nvidia shares fall as much as 5% inextended trade after earnings, despite beating on Q2 revenue andforecasting strong Q3 revenue on robust AI chip demand.
- FX: Dollar index gives back gains, ends flat. In G10space, dollar falls most vs Canadian dollar and Norwegian krone.
- BONDS: French 30-year yield highest since 2011. U.S.2-year yield falls to 3.62%, lowest since May. 5-year auctiongoes reasonably well.
- COMMODITIES: Oil rebounds 1% plus from Tuesday'sselloff. Brent crude futures have now swung 1% or more in nineof the last 10 trading sessions.
Today's Talking Points:
- Wings of a dove: Investors remain confident that the Fed will cut interest rates next month as the controversy around President Donald Trump's attempts to fire Fed Governor Lisa Cook persists. Traders are putting a near-90% probability on a move next month, and the 2-year Treasury yield fell to its lowest since May. New York Fed President John Williams said rates are probably headed lower, but officials need to see more economic data before deciding if a cut next month is appropriate.
- Stock rotation: The S&P 500 clocked a new high on Wednesday, led by the energy and healthcare sectors. As August draws to a close, the rotation into small cap and value stocks from tech and growth stocks shows no sign of reversing.