Nvidia's Stock Hits New High After Four Months of Volatility: What Does It Mean?
Nvidia's return to highs signals a shift in US squity narrative logic.
This summer, events such as AI earnings misses, the reversal of carry trade trends, and unexpectedly weak non-farm reports that raised expectations for rate cuts, led to a significant adjustment in tech stocks. The US equity market experienced a style rotation, with technology stocks, which had long dominated the market, being sold off. Meanwhile, financials, industrials, defensive sectors, and small-cap stocks, which had been out of favor, began to rise.
However, since the Federal Reserve's rate cut in September, tech stocks have been regrouping. Data shows that IT and communication services, the two worst-performing sectors in the S&P 500 Index for the third quarter, have become one of the best-performing sectors since the September FOMC meeting, with the IT index rising by over 7%.
The market is closely watching the ongoing US earnings season to determine whether this rebound marks the beginning of tech stocks regaining their influence in the US equity market or if it is just a temporary catch-up move in the continuing rotation.