Wall Street has ended its day slightly higher, after strong gains from stocks like Nvidia and Eli Lilly.
That was despite US President Donald Trump’s decision to sack a central bank governor — and the concerns this raises about the Federal Reserve’s independence.
Nvidia rose 1.1% ahead of its quarterly report late on Wednesday (local time), which will show how the world’s most valuable company is faring in the crossfire of Washington and Beijing’s ongoing trade war.
The chipmaker’s report could also fuel – or dampen – Wall Street’s rally in AI-related stocks.
Trump late on Monday said he was removing Fed Governor Lisa Cook over alleged improprieties in obtaining mortgage loans, adding to concerns about the central bank’s independence from politics.
S&P 500 futures briefly sank before the stock market recovered as investors focused on unchanged expectations that the central bank will begin cutting interest rates in September.
Despite lingering inflation pressures, traders have been pricing in a 25-basis-point interest rate cut for the Fed’s September policy meeting, encouraged by dovish signals from Fed Chair Jerome Powell, data pointing to labour market weakness and a shakeup at the central bank.
Eli Lilly jumped almost 6% after the drugmaker said its experimental pill cuts body weight by 10.5% in diabetes patients.
The S&P 500 is trading at about 23 times expected earnings, a four-year high, heightening the risk of a selloff if Nvidia’s results dent Wall Street’s enthusiasm for AI-related stocks.
The S&P 500 climbed 0.4% to end the session at 6,466 points, just short of its August 14 record-high close.
The Nasdaq gained 0.4% to 21,544 points, while the Dow Jones Industrial Average rose 0.3% to 45,418 points.