Nasdaq 100 and S&P500: Tech Stocks Rally on Nvidia Surge, Fed Minutes in Focus Today

S&P 500 and Nasdaq Rebound as Nvidia Reignites AI Optimism

Stocks bounced back Wednesday, with the S&P 500 rising 0.6% and the Nasdaq up 0.8%, reversing the previous session’s dip. Gains in Nvidia helped restore confidence in the AI trade, while strength in utilities and tech sectors supported broader market sentiment. The Dow Jones added 194 points, or 0.4%, as traders largely shrugged off the continued government shutdown.

Is Nvidia’s Surge Enough to Keep AI Momentum Alive?

Nvidia gained over 1% after CEO Jensen Huang said demand for computing power has “gone up substantially” in the past six months. His comments came as a direct counter to concerns triggered by Oracle’s recent weak cloud margins, which had sparked fears of an AI valuation bubble. Nvidia’s reassurance suggests capital investment in AI infrastructure still has legs, with Huang emphasizing investor excitement around Elon Musk’s xAI venture.

Strategists like Baird’s Ross Mayfield acknowledged the enthusiasm but warned tech remains vulnerable to sharp corrections. He likened the current cycle to the late 1990s, saying investors could see multiple pullbacks before a potential long-term peak forms.

Is the U.S. Government Shutdown Still a Contained Risk?

The shutdown entered its eighth day, and while equities have shown resilience, risks are growing. The Senate failed again to pass a stopgap funding bill. President Trump signaled not all furloughed workers may receive back pay, and military payroll delays could emerge if the stalemate continues. So far, markets appear focused elsewhere, but a prolonged impasse may dent consumer sentiment and disrupt spending cycles.

What Are Central Banks Signaling About Market Risks?

Both the Federal Reserve and Bank of England issued cautious tones. Traders are awaiting the Fed’s September meeting minutes, which could clarify the internal split on interest rate policy and inflation expectations.

The BoE, in its financial stability report, warned of “stretched” valuations in AI-heavy tech names, adding that markets may be underpricing broader risks—ranging from geopolitical tensions to elevated sovereign debt.

The BoE noted increased index concentration could leave equities especially vulnerable if AI expectations are scaled back, mirroring some investor concerns in U.S. markets.

Which Sectors Are Leading, and Where’s the Rotation Happening?

Technology and utilities led Wednesday’s gains, with both sectors on track to close at record highs. Investors are betting on long-term AI demand, particularly as data center power needs expand. The tech sector rose 1.05%, while utilities gained 0.65%.

Health care also drew attention after Bank of America upgraded the sector to overweight. Strategist Savita Subramanian cited attractive valuations and margin improvements tied to slowing wage growth and AI adoption. The firm highlighted Eli Lilly, Dexcom, Ionis, and Thermo Fisher as top picks. The health care index closed up 0.32%.

Market Outlook: Watch for Central Bank Clarity and Shutdown Fallout

With Nvidia reinforcing AI confidence, short-term sentiment in tech remains positive, though traders should brace for volatility as valuations stay elevated. Central bank warnings and Fed minutes may dictate the next move in interest rate expectations.

Meanwhile, any escalation in the government shutdown could turn into a drag on consumer spending and confidence.

Traders should stay focused on rate commentary, sector rotation, and potential earnings resets in tech and health care.

More Information in our Economic Calendar.