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Wall Street surges as Fed minutes focus on rate cuts and Nvidia reaches $4 trillion milestone

The Nasdaq and Wall Street indexes both closed higher on Tuesday after Federal Reserve minutes raised hopes that the inflationary pressures caused by President Donald Trump’s tariffs wouldn't derail rate cuts in 2018. Nvidia briefly hit a valuation of $4 trillion. Minutes of the Fed's mid-June meetings showed that many Fed officials expect interest rate cuts to occur later this year. They also said that Trump's tariffs on imports would only have a "temporary" or modest impact on prices. There was, however, little support for a cut in rates at the end-of-July meeting. Nvidia closed higher on Wednesday after becoming the first company in the world to reach a $4 trillion valuation. This solidified its position as Wall Street's favorite stock to take advantage of the surge in demand for artificial-intelligence technologies. "Fed officials indicated that they believed inflation would be higher in the future. Many or most officials also said that they expected lower interest rates this year. "Those two things do not match," said Chris Brigati. Chief investment officer of SWBC, a San Antonio-based investment firm.

"Perhaps the government is starting to pay more attention to what's happening on the labor market."

Other megacaps, such as Microsoft Corp. and Amazon.com, also boosted the market. There's definitely a bias towards megacaps. Kevin Gordon, senior Investment Strategist at Charles Schwab said that it is a flight to security but not the traditional safety trade. From a trading perspective, it's hard to get much clarity.

Preliminary data shows that the S&P 500 rose 36.36 points or 0.58% to 6,261.88 while the Nasdaq Composite grew 189.34 or 0.93% to 20,607.23. The Dow Jones Industrial Average increased 214.23 or 0.48% to 44,450.53.

Analysts note that while Wall Street indexes fell on Monday due to trade fears, they have since stabilized. Investors have grown accustomed to Trump's pattern for saber rattling about tariffs. The deadline for the latest tariffs has been pushed back to August 1. Many are betting on negotiations to defuse the current trade war.

Trump sent letters on Wednesday to seven countries, requesting tariffs of 30% for Algeria, Iraq and Libya, 25% for Brunei, Moldova and the Philippines, and 20% for the Philippines. The European Union said that it may be able to reach a basic trade agreement with the U.S. within the next few days.

Trump had intensified his trade offensive on Tuesday with an announcement of a tariff of 50% on copper, and a promise to impose long-threatened duties on semiconductors and drugs. Trump announced on Monday that he would impose a 50% tariff on copper and levy levies against semiconductors and pharmaceuticals.

Hit 14 Trading Partners

With a new wave of tariff warnings including Japan and South Korea.

The market has become a bit desensitized by tariffs. SWBC's Brigati said that the market is saying we might be able to get through tariffs because of three months' positive growth. Investors will be looking at Thursday's first jobless claims to get the pulse of the labor market after last week's record closings for the S&P 500 & Nasdaq – buoyed by a surprisingly strong jobs report. Bloomberg reported on AES Corp's exploration of options, which included a possible sale.

Boeing shares rose as Susquehanna increased its price target following the planemaker's Tuesday announcement that its aircraft deliveries in June were higher than expected

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27% annually.

UnitedHealth Group's shares fell after the Wall Street Journal reported the U.S. Department of Justice is investigating how doctors and nurses were used to collect diagnoses for Medicare payments.

(source: Reuters)