US stocks hit records as Fed cuts rates, Nvidia fuels rally

U.S. stock markets closed at record highs on Thursday after the Federal Reserve cut interest rates by a quarter-percentage-point and a major AI-chip deal helped propel technology shares higher. The central bank signaled a path toward further easing this year and into 2026, boosting confidence that monetary policy will remain accommodative as the economy cools. The Dow Jones Industrial Average rose 0.27%, the S&P 500 gained 0.48%, and the Nasdaq Composite jumped 0.94%, tying a broad rally to a rotation into technology names. The small-cap Russell 2000 also reached an intraday and, by some measures, an all-time high as investors rotated into riskier bets that linked artificial intelligence, semiconductors, and domestic manufacturing.

A key driver of the rally was a strategic move in the chip sector: Nvidia said it would invest about $5 billion in Intel as part of a broader effort to bolster U.S. chip manufacturing and ensure domestic supply chains. Intel shares surged more than 22% on the news, signaling investor relief over the company’s turnaround prospects and the belief that government-led incentives could accelerate domestic chip-making. Nvidia, meanwhile, closed up about 3.5% for the session, extending its already strong run as demand for high-performance computing and AI accelerators remains robust. The two names underscored a broader tilt toward domestic capabilities in critical tech industries, a theme that has gained renewed urgency amid ongoing trade and security concerns.

The mood in markets was tempered by a broader backdrop of central-bank policy shifts and inflation considerations, with investors parsing the sustainability of higher equity valuations against the backdrop of strong corporate earnings and slower economic growth. Neil Wilson, UK investment strategist at Saxo Markets, cautioned that the moves may reflect not only improved sentiment but also structural changes in the tech and defense-industrial complex. He said: “Huge changes afoot at Intel, and perhaps a sign of the way things are going with consolidation and cooperation in the tech space – driven by national security and trade policies emanating ultimately from the Trump White House. The U.S. needs Intel or it's reliant on Taiwan Semi. Ultimately, this could just be the start to greater pooling of resources, harnessing domestic tech and ensuring it remains focused on doing what the government requires of it. Further down the line, a Mag 7 mega-merger maybe, using profits to fund government programmes?”

Gold rose briefly, with the price edging higher as traders weighed the Fed’s tone against global growth prospects. Gold recovered about 0.2% in early London trading to $3,684.40 per ounce, a reflection of ongoing demand for safe-haven assets amid ongoing policy adjustments and geopolitical uncertainties.

Across the Atlantic, European markets were more muted. The FTSE 100 and the pan-European STOXX 600 hovered around the flatline as investors digested a week dominated by central-bank decisions. The UK-focused FTSE 250 traded slightly lower, pressured by a softer sterling and concerns about domestic growth after official data showed higher-than-expected government borrowing last month. Richard Hunter, head of markets at Interactive Investor, observed that domestic economic headwinds weighed on the FTSE 250 at the open, though he noted the index had gained about 5% year-to-date, aided by renewed interest in the broader UK equity market and overseas demand. He added that the blue-chip index’s performance has been resilient, underscoring how investors are balancing domestic risks with the pull of the rebounding U.S. market and the global tech cycle.

The session’s results come as traders shifted expectations toward a path of further rate cuts in the United States. The Fed’s 25-basis-point reduction pared the target range for the federal funds rate to a new corridor and signaled that policymakers foresee continued accommodation, with markets pricing in two additional reductions before year-end and another cut in 2026. Traders cited the prospect of easier policy as a cornerstone for stocks that have benefited from a low-rate environment, a favorable funding backdrop for buybacks and acquisitions, and the accelerating demand for AI and cloud infrastructure services. The rally in semiconductor-related equities reflected faith that the improvement in policy settings could align with strong demand for AI-processing chips and the architectural changes that NVIDIA’s ecosystem supports, from data centers to edge devices.

The broader earnings landscape and macro backdrop continue to shape trading as investors weigh the implications of a gradual slowdown in growth against the potential for a more sustained upturn in corporate profitability. While the Fed’s move is widely viewed as supportive of equities, market participants remain vigilant for signs of inflation persistence and any changes in the trajectory of rate expectations that could trigger volatility in late-year trading. As the year progresses, analysts will be watching for updates on production capacity, supply-chain resilience, and the pace at which major tech platforms can monetize AI innovations on a large scale. In the near term, the appetite for high-growth tech names appears buoyant, underpinned by expectations of ongoing investment in computing infrastructure and domestic manufacturing capabilities that align with policy priorities and national security considerations.