Nasdaq Index: Tesla and Nvidia Lead Tech Rally as Rate-Hike Odds Fall

Waller Broke the Rate-Hike Trade and the Nasdaq Led the Response

U.S. stocks surged late Thursday. Fed Governor Christopher Waller said he would lean toward holding rates steady at the September meeting if the next two weeks of inflation data keep improving. September hike odds dropped to 50.3% from 63% in one session. The 10-year Treasury yield fell five basis points to 4.74%. The dollar sold off against the yen. The market had been trading Warsh’s Jackson Hole warning for four straight sessions. Thursday it got a counter-punch from inside the Fed.

The Nasdaq Composite gained 1.4%. The Dow rose 1.2%. The S&P 500 added 1.0%. Tesla and SpaceX added more than $200 billion in market value. Bitcoin pushed back above $80,000.

Daily Nasdaq Composite (IXIC) Technical Analysis

The Nasdaq Composite is surging late in the session on Thursday after overtaking a key 50% level at 26393.17. Today’s sustained move over this level has put the tech-heavy index in a position to overcome the swing top at 26700.68. A trade through this level will change the main trend to up, possibly setting it up for a near-term test of the August 13 main top at 26875.52, followed by the all-time high at 27190.21.

On the downside, a break back under the 50% level at 26393.17 will be the first sign of weakness. If this creates enough downside momentum, there may be another test of the 50-Day moving average at 25990.28.

Essentially, 26393.17 has to hold to sustain the short-term strength. Longer-term, the 50-day MA is the major support.

Waller Did Not Turn Dovish but He Did Not Sound Like Warsh

Warsh said last week the Fed could have more work to do if inflation did not move toward target. Waller said Thursday that three-month inflation has fallen from 4.76% in February. He called the pace encouraging. He still said inflation is well above 2%. He listed energy, tariffs and AI-related technology goods as upside risks. He said the Committee can afford to wait one meeting.

That was the gap the market needed. September odds went from two-thirds leaning toward a hike to a coin flip. The yen ripped more than 1% higher against the dollar near 156.1. The 10-year dropped five basis points. The Nasdaq took off because the names that got hit hardest during the bond selloff had the most to gain when rates came back down.

ISM Services Were Strong and the Prices Number Was Not Friendly

The ISM services index hit 55.4 in August, above the 54.1 expected, the strongest since February. New orders jumped to 60.9, the best reading since early 2023. Employment improved to 47.8 but stayed in contraction. Initial claims rose 2,000 to 206,000. Continuing claims hit 1.78 million.

The prices-paid index rose to 72.6 from 70.3. That is the number that did not cooperate. Waller’s argument rests on inflation continuing to improve. Services prices running near a multi-year average high are not improving. Brent above $95 is not helping. Trump called the latest U.S. attack on Iran very heavy and said the fighting would not last too long. Oil has not given back its recent advance. The Strait of Hormuz is still disrupted.

Tesla Ran 7% and Nvidia Bought Hugging Face

Tesla rose 7% ahead of its Cybercab event. The stock moves when yields drop. Thursday yields dropped. SpaceX gained more than 7% after Oppenheimer raised its price target to $280 on AI platform improvements and faster computing infrastructure buildout. Tesla and SpaceX together added more than $200 billion in market value Thursday.

Nvidia gained about 1% after announcing plans to acquire Hugging Face for roughly $13 billion, a deal expected to close in 2027. The purchase takes Nvidia into the software and developer tools side of the AI trade. Broadcom slipped on a fourth-quarter revenue forecast of $34.8 billion that missed the $35.03 billion the street wanted. Non-GAAP operating margin guidance of 66% also came up short of 66.5%. Strong third quarter. The guidance was not strong enough.

Stocks in the News

Bitcoin pushed back above $80,000 on the rate-trade reversal. Lululemon and DocuSign report after the close. Lululemon needs the consumer spending on premium discretionary. DocuSign needs software buyers paying for growth while the AI disruption question hangs over the group.

What to Watch

Friday’s payrolls report runs the market from here. Economists expect 56,000 jobs. Waller gave buyers room Thursday. ISM services prices at 72.6 and Brent above $95 are still on the inflation side. September odds are sitting at 50.3%. Friday’s number tips the balance. The Fed has not agreed on what to do in September. Waller and Warsh gave the market opposite reads in the same week.

The Nasdaq cleared the 50% level at 26,393.17 Thursday and is pressing the swing top at 26,700.68. Getting through that level changes the main trend to up with the August 13 top at 26,875.52 and the all-time high at 27,190.21 above. The 50% level at 26,393.17 has to hold to sustain the strength. The 50-day at 25,990.28 is the major support underneath. Friday’s number decides whether Thursday’sS& breakout was real or whether the rate trade comes back and takes it away.

More Information in our Economic Calendar.