The S&P 500 closed in positive territory on Tuesday, supported by gains in Nvidia and Eli Lilly. At the same time, President Donald Trump's decision to dismiss the head of the Federal Reserve reignited concerns about the central bank's independence.
Shares of Nvidia rose 1.1 percent ahead of Wednesday's quarterly earnings release. Investors are eager to see how the world's most valuable chipmaker navigates the crossfire between Washington and Beijing in the ongoing trade dispute. The results could either fuel the rally in AI-related stocks or dampen the momentum that has recently energized Wall Street.
On Monday evening, Trump announced the removal of Fed Chair Lisa Cook, citing alleged irregularities in mortgage dealings. The move raised fresh questions about the central bank's autonomy. Futures on the S&P 500 briefly dipped after the news but quickly rebounded as investors refocused on expectations of a rate cut in September.
Despite lingering inflationary pressure, traders are pricing in a 25 basis-point reduction at the Fed's September meeting. Their optimism stems from dovish signals by Fed Chair Jerome Powell, soft labor market data, and leadership changes at the central bank. Morgan Stanley joined other major brokers in forecasting a rate cut, though upcoming reports on inflation and employment could reshape investor sentiment.
Shares of Eli Lilly jumped nearly 6 percent after the pharmaceutical giant announced promising results from clinical trials. Its experimental diabetes treatment was shown to reduce patient weight by an average of 10.5 percent, fueling strong investor enthusiasm.
US equities ended Tuesday higher, with all three key benchmarks advancing, though record highs remained just out of reach.
Trading results:
Seven of the 11 primary S&P 500 sectors finished higher. Industrials led the gains, rising 1.03 percent, while financials followed with a 0.76 percent increase.
Advanced Micro Devices rose 2 percent after Truist Securities upgraded the chipmaker's rating from "hold" to "buy." EchoStar shares soared an impressive 70 percent to an all-time high after AT&T announced plans to acquire certain wireless spectrum licenses from the company in a deal worth roughly 23 billion dollars.
Asian markets traded mixed on Wednesday as investors awaited Nvidia's earnings report. Results from the AI leader are expected to shape near-term risk sentiment. Meanwhile, the US dollar wavered amid persistent concerns about political pressure on Federal Reserve independence.
European equity futures began the session in positive territory, though investor sentiment remains cautious. The hesitation comes after Prime Minister Francois Bayrou failed to gain support for his widely unpopular plan to reduce national debt.
This latest setback follows a turbulent period in French politics. At the end of 2024, former Prime Minister Michel Barnier was forced to resign after losing a confidence vote on the budget, only three months into his tenure.
Yields on two-year government bonds, typically sensitive to interest rate expectations, touched their lowest level since May at 3.654 percent before climbing back to 3.661 percent, up 1.8 basis points. Thirty-year bonds also rose, with yields adding 1.4 basis points to 4.922 percent.
The MSCI index tracking Asia-Pacific shares outside Japan showed little change. However, Chinese markets extended their rally: the blue-chip CSI300 index hit a three-year high, boosted by strong performance in the technology sector.
Gold prices slipped 0.47 percent, retreating after reaching a two-week peak in the previous session. Oil markets steadied following the prior day's decline, as traders weighed the impact of new US tariffs on India, the world's third-largest oil consumer.
Brent futures edged up by 5 cents to 67.27 dollars per barrel. West Texas Intermediate contracts gained 3 cents, closing at 63.28 dollars per barrel.
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