Stocks Rally Before Nvidia Results as S&P 500 Tops 1%
US stocks rose more than 1% on Wednesday as investors positioned for nvidia results after the closing bell. The S&P 500, Nasdaq Composite, and Dow Jones Industrial Average all moved higher while bond market selling eased and oil prices fell. Traders also priced Nvidia for a 5.5% move in either direction, making the chip company the day’s main test for AI demand.
Nvidia and the 5.5% move
5.5% was the swing traders were pricing in for Nvidia shares after the results, a sharp one-day move for a stock that sits at the center of the AI trade. That sort of implied move tells you how much rests on one report: investors want proof that demand is still broad enough to justify the valuation embedded in the shares.
110 gigawatts was the size of the order Tesla disclosed earlier in the week, but Wednesday’s focus stayed on Nvidia, where the market was waiting for a signal on whether AI spending is still accelerating. Markets have continued to price Nvidia as one of the most important stocks for the AI trade, and most analysts covering the company maintain Buy ratings.
Fed Minutes and bond yields
2% was the Federal Reserve’s inflation target referenced in minutes from the central bank’s April meeting, which showed policymakers were prepared to move away from an easing bias if inflation stayed persistently above that level. US bond yields retreated from levels not seen in almost two decades, easing pressure on growth stocks that had been under strain from sticky inflation and higher rates.
More than 600 points was the Dow’s gain on Wednesday, and the index rose 1.3% as the S&P 500 advanced more than 1% and the Nasdaq Composite jumped 1.5%. The move followed Tuesday’s decline and came as crude oil prices were on track for their largest single-day drop in a month, with President Donald Trump saying the US was in the “final stages” of reaching a deal with Iran.
Peter Orszag on AI growth
“levered bet on AI” was how Lazard CEO Peter Orszag described the US economy on Wednesday, adding: “If you look at the sources of growth in the US, it is artificial intelligence and high-income consumers” and “Like many bets, it may or may not pay off, but it’s a good bet to be making.” His comments fit the day’s price action: the market was treating AI spending as a central growth driver, not a side theme.
Wednesday’s rally also came after Target reported first quarter results and Lowe’s beat expectations on the top and bottom lines, but Nvidia remained the key event because its earnings were due after the closing bell. For traders, the setup was simple: the broader market had already leaned higher, and the next move depended on whether Nvidia could justify the 5.5% swing that was already priced into the shares.
Federal Reserve minutes from April and Nvidia’s earnings release left the market with two live signals in the same session: policy still points to sticky inflation risk, while the biggest AI stock must now show that demand is strong enough to support its role in the rally.
