Nasdaq Index and S&P500: Alphabet, Tesla Push US Stocks Higher Before Fed Call

S&P 500 and Nasdaq Hit New Highs as Traders Brace for Fed Rate Cut

U.S. stocks climbed to fresh record highs on Monday, led by the Nasdaq and S&P 500, as traders priced in a near-certain Federal Reserve rate cut this week. The dollar softened while gold hovered near record territory, underscoring the market’s bet on monetary easing. The Dow Jones Industrial Average dipped slightly by 18 points, while the Nasdaq surged 0.86%, driven by strength in tech and communication services.

Will the Federal Reserve Cut Rates on Wednesday?

 

According to the CME FedWatch tool, markets are nearly unanimous in expecting a 25 basis-point cut. The 10-year Treasury yield dropped 2.4 basis points to 4.036%, reflecting confidence in a dovish outcome. Traders will pay close attention not only to the rate decision but also to the updated “dot plot” and Powell’s guidance on the pace of future cuts. Futures have already priced in 125 basis points of easing through late 2026, meaning any perceived hesitation from the Fed could prompt a selloff.

How Did Alphabet, Nvidia, and Tesla Drive the Rally?

Alphabet (GOOGL) surged 3.6%, pushing its market cap to $3 trillion for the first time. The rally followed a favorable U.S. court ruling preserving Google’s control over Chrome and Android, easing antitrust concerns. Strong growth from its cloud division and optimism around AI investments further boosted sentiment.

Tesla (TSLA) climbed 6% after Elon Musk disclosed a $1 billion share purchase, reinforcing his long-term commitment to the EV maker. The move follows a new $1 trillion pay package proposed by Tesla’s board and comes as the company battles slowing demand and rising competition. Despite recent gains, Tesla remains down 2% year-to-date. Nvidia (NVDA), however, slipped 0.47% after news of a Chinese antitrust investigation.

Which Sectors Are Leading as the Fed Decision Nears?

Consumer discretionary and communication services led sector gains, up 1.72% and 1.99% respectively, as investors rotated into growth plays. Technology also posted a solid 0.48% gain. Defensive sectors lagged, with healthcare down 1.05% and consumer staples falling 0.7%.

What’s Next for Markets Heading into the Fed Meeting?

Markets are fully positioned for a dovish outcome, and traders are eyeing Wednesday’s announcement for confirmation. A smaller-than-expected rate path or vague Fed commentary could trigger profit-taking in overbought equities.

Meanwhile, geopolitical news also looms large — the U.S. and China have reportedly reached a deal framework on TikTok, potentially reshaping digital ad markets depending on the buyer. With tech valuations stretched and expectations high, traders should brace for volatility tied to Fed tone and follow-through.

More Information in our Economic Calendar.