Wall Street Rises as Fed Minutes Put Rate Cuts in Focus, Nvidia hits $4 Trillion Milestone

Stocks

Summary:

While Wall Street indexes had fallen on trade jitters on Monday, they have steadied since then, with analysts noting that investors have become used to Trump's pattern of saber-rattling on tariffs.

Wall Street indexes closed higher on Wednesday, led by the tech-heavy Nasdaq as Nvidia briefly reached a $4 trillion valuation, and Federal Reserve meeting minutes fueled hopes that inflation pressures from President Donald Trump's tariffs would not derail interest rate cuts this year.

The minutes for the mid-June meeting showed that most Fed officials said they expect rate cuts will be appropriate later this year, with price shocks from Trump's import taxes expected to be "temporary or modest." However, there was little support for a rate cut at the end of July meeting.

Nvidia (NVDA.O), became the world's first company to hit a $4 trillion market value on Wednesday morning, solidifying its position as one of Wall Street's most favored stocks to tap in the ongoing surge in demand for artificial intelligence technologies. Shares in the chip company ended Wednesday up 1.8% with a market capitalization of around $3.97 trillion.

It helped lift the Nasdaq, which closed at an all-time high.

While concerns about tariff-induced inflation pressure did not stop Wall Street from hitting fresh record highs last week, Chris Zaccarelli, chief investment officer for Northlight Asset Management, noted that they have caused the Fed to pause interest rate hikes.

"Fed officials suggested that they believe inflation will be higher down the road. At the same time, many or most officials suggested that they expect lower interest rates at some point this year. Those two things don't match," said Chris Brigati, chief investment officer at SWBC, an investment company in San Antonio, Texas. "Perhaps they're starting to put a little bit more weight into what's going on with the labor market."

Besides Nvidia, other market boosts came from megacap companies including Microsoft Corp (MSFT.O), which rose 1.4% and Amazon.com (AMZN.O), which added 1.5%.

"There's definitely a megacaps bias. ... To some extent it's a flight to safety but not what you would traditionally think of as a safety trade," said Kevin Gordon, senior investment strategist at Charles Schwab. "From a trade standpoint it's not like you're getting much clarity."

While Wall Street indexes had fallen on trade jitters on Monday, they have steadied since then, with analysts noting that investors have become used to Trump's pattern of saber-rattling on tariffs. And with the deadline for the latest tariffs pushed to August 1, many are betting that negotiations will defuse the trade war.

Trump issued letters to seven countries on Wednesday, calling for tariffs of 30% on Algeria, Iraq, Libya and Sri Lanka, 25% on Brunei and Moldova, and 20% on the Philippines. The European Union has said it could reach an outline trade agreement with the U.S. in the coming days.

On Tuesday, Trump had ramped up his trade offensive with the announcement of a 50% tariff on copper and a vow to slap long-threatened levies on semiconductors and pharmaceuticals. On Monday, Trump hit 14 trading partners with a fresh wave of tariff warnings, including Japan and South Korea.

"The market is becoming a little desensitized to the bad news of tariffs. ... You had three months of still constructive growth and things have not been that bad so the market's saying maybe we can get through these tariffs," said SWBC's Brigati.

The Dow Jones Industrial Average (.DJI),rose 217.54 points, or 0.49%, to 44,458.30, the S&P 500 (.SPX), gained 37.74 points, or 0.61%, to 6,263.26 and the Nasdaq Composite (.IXIC), gained 192.87 points, or 0.95%, to 20,611.34.

Eight of the 11 S&P 500's major industry sectors advanced, led by utilities (.SPLRCU), up 1%, and technology (.SPLRCT), up 0.9%. Consumer staples (.SPLRCS), often seen as a more defensive sector, was the biggest loser, ending down 0.6%.

After last week's record closes for the S&P 500 and the Nasdaq - buoyed by a surprisingly robust jobs report - investors are turning their attention to Thursday's initial jobless claims for the next pulse check on the labor market.

Among individual stocks, AES Corp (AES.N), rallied 19.8% after Bloomberg reported that the power provider was exploring options, including a sale.

Boeing (BA.N), shares advanced 3.7% as Susquehanna raised its price target after the planemaker reported on Tuesday that its airplane deliveries in June increased 27% on a yearly basis.

UnitedHealth Group (UNH.N), shares slipped 1.6% after the Wall Street Journal reported that the U.S. Department of Justice was investigating how the health insurer deployed doctors and nurses to gather diagnoses that increased its Medicare payments.

Advancing issues outnumbered decliners by a 2.17-to-1 ratio on the NYSE where there were 280 new highs and 39 new lows on the NYSE.

On the Nasdaq, 2,988 stocks rose and 1,551 fell as advancing issues outnumbered decliners by a 1.93-to-1 ratio.

The S&P 500 posted 20 new 52-week highs and six new lows while the Nasdaq Composite recorded 72 new highs and 44 new lows.

On U.S. exchanges, 18.10 billion shares changed hands compared with the 18.35 billion average for the last 20 sessions.

Source: Reuters

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Manuel

Cryptocurrency

Political

A top U.S. securities regulator known for her supportive stance on the cryptocurrency industry said on Wednesday that new models for trading securities known as "tokenization" must still meet regulations for other securities.

Hester Peirce, a Republican commissioner on the Securities and Exchange Commission who has been nicknamed "crypto mom," said in a statement: "As powerful as blockchain technology is, it does not have magical abilities to transform the nature of the underlying asset. Tokenized securities are still securities."

Tokenizing equities is a process by which shares of a company are converted into a digital token, similar to how cryptocurrencies are traded. Instead of holding the securities directly, investors hold tokens that represent ownership of the securities.

Such tokens could be created by the security issuer itself, or by an entirely unrelated third party. Anyone who buys a third-party token could face unique risks, she said.

Crypto firms and others have been increasingly discussing the prospect of tokenizing securities as a new way to facilitate trading. Coinbase recently told Reuters it was seeking a U.S. green light from the SEC to offer blockchain-based stocks.

SEC Chairman Paul Atkins, also a Republican, said in a CNBC interview last week that the agency should encourage innovation when asked about the prospect of tokenizing securities.

Critics say the new technology could become a way to evade SEC oversight and expose retail investors to new risks.

Source: Reuters

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Manuel

Central Bank

Bond

Financial market participants have pushed out yet again the end date for the effort to shrink the size of the Federal Reserve's large balance sheet, the minutes of the U.S. central bank's June 17-18 policy meeting showed on Wednesday.

The drawdown of the Fed's stock of bonds is now expected to stop in February when the balance sheet stands at $6.2 trillion, big banks and money funds told the U.S. central bank ahead of last month's policy meeting, the minutes noted. That represents a small shift from what survey respondents said ahead of the Fed's policy meeting in early May, when they eyed a January end date, and $6.125 trillion in total holdings.

The Fed has been shrinking the size of its balance sheet since the summer of 2022 in an effort referred to as quantitative tightening, or QT. The central bank has allowed set amounts of bonds it bought during the COVID-19 pandemic to mature and not be replaced, in an effort that so far has taken the overall stock of cash and bonds it holds from a record $9 trillion to the current level of $6.7 trillion.

The Fed more than doubled its bond holdings to stabilize markets and then provide stimulus to the economy beyond what could be delivered by near-zero short-term rates. The QT program has been aimed at removing excess levels of liquidity from the market as part of a broader monetary policy normalization, but there's been ongoing uncertainty when that process could end, and at what level of holdings the Fed would be able to rest at.

For some time, market participants have expected the Fed to stop QT this year. But earlier in 2025 the Fed slowed QT in order to reduce the risk of market disruptions while the Treasury Department took action to deal with government financing needs during wrangling over the government's official borrowing limit and its broader budget needs.

Much of that uncertainty was resolved last week with the passage of a Trump administration budget bill that lifted the borrowing cap, which will allow the Treasury to sell more debt. Increased debt sales will cut into the reserve levels the Fed has been trying to shrink with QT.

The reserves now stand at around $3.3 trillion, a level that's been steady for some time. The minutes released on Wednesday said market participants told the Fed they see reserves dipping to $2.9 trillion due to QT. Respondents also said the Fed's reverse repo facility, which held $227 billion on Wednesday, should move to a "low" level.

Source: Reuters

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Manuel

Cryptocurrency

Political

A group of US Democratic senators has introduced a new bill to sanction El Salvador’s President Nayib Bukele and members of his administration.

The legislation, titled the El Salvador Accountability Act (S.2058), was put forward by Senators Chris Van Hollen, Tim Kaine, and Alex Padilla.

If passed, the bill would require President Donald Trump to impose sanctions over alleged human rights violations and the misuse of Bitcoin by the Salvadoran government.

Bill details

The proposed legislation accuses El Salvador’s government of violating internationally recognized human rights, particularly through the country’s ongoing state of exception.

Due to this, it calls for sanctions on President Bukele, members of his cabinet, and other individuals working on behalf of the government—including political party officials and leaders of government institutions—based on credible information of misconduct.

The bill proposes strong penalties, including freezing US-held assets, visa denials, and suspending financial aid.

The lawmakers argue that Salvadoran institutions have committed these violations while benefiting from US taxpayer dollars.

The bill also requires the president to provide annual updates, beginning with a detailed report on sanctioned individuals within 90 days of its passage.

Meanwhile, the legislation also directs the US Secretary of State to submit a comprehensive report about El Salvador’s crypto use within 90 days of the bill’s enactment.

This report must outline how Salvadoran officials have allegedly used Bitcoin and other digital assets to engage in corruption, evade sanctions, and misuse government resources.

It should include an estimate of how much public funding El Salvador has spent on Bitcoin acquisitions, identify the exchanges used for those purchases, list associated wallet addresses, and highlight any actors with access to the funds.

Additionally, the report must evaluate potential loopholes in El Salvador’s crypto strategy that could be exploited for illicit purposes, including efforts to bypass international financial sanctions.

Bukele’s response

In response to the bill, President Bukele dismissed the US lawmakers’ attempt to impose sanctions on him and his government.

On June 8, Bukele mocked the proposal in a post on X (formerly Twitter), suggesting that the lawmakers’ efforts were fueled by frustration.

This reaction is not surprising, given the growing relationship between the two presidents. This includes their collaboration on El Salvador’s efforts to combat criminal gangs and their shared pro-crypto stance.

President Trump invited Bukele to the White House in April to discuss US immigration support. Two months later, Trump’s advisor, Bo Hines, met with Bukele to explore potential crypto partnerships.

Source: Cryptoslate

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Manuel

Economic

Central Bank

Only "a couple" of officials at the Federal Reserve's June 17-18 meeting said they felt interest rates could fall as soon as this month, with most policymakers remaining worried to some degree about the inflationary pressure they expect to come from President Donald Trump's use of import taxes to reshape global trade.

Trump has demanded immediate cuts, and called for Fed Chair Jerome Powell to resign, but the minutes showed only narrow support for a reduction in borrowing costs among the Fed's 19 policymakers.

"Most participants" at the Fed's meeting did anticipate rate cuts would be appropriate later this year, with any price shock from tariffs expected to be "temporary or modest," said the minutes, which were released on Wednesday.

The document covered the deliberations at the U.S. central bank's Federal Open Market Committee meeting last month, at which officials unanimously voted to keep the benchmark interest rate in the 4.25%-4.50% range set last December.

"Participants generally agreed that, with economic growth and the labor market still solid and current monetary policy moderately or modestly restrictive, the Committee was well positioned to wait for more clarity on the outlook for inflation and economic activity," the minutes said. Fed Minutes Show Narrow Support for Rate cut Later This Month_1

Fed Minutes Show Narrow Support for Rate cut Later This Month_1

While many policymakers agreed rate cuts might be appropriate later this year, there was broad division about the outlook.

"Some participants ... saw the risk of elevated inflation as remaining more prominent," the minutes said. Seven policymakers in projections issued after the June meeting anticipated no rate cuts this year.

"A few participants saw risks to the labor market as having become predominant," the minutes stated.

But officials seemed, in large part, wary to change monetary policy while so much remained up in the air about the final tariff rates that Trump intends to impose and how businesses and consumers will respond.

Fed officials "agreed ... it remained appropriate to take a careful approach in adjusting monetary policy," according to the minutes.

The comments in the minutes were reflected in the interest rate projections issued after the two-day meeting, with the median rate outlook pointing to two quarter-percentage-point cuts by the end of 2025. Investors expect an initial cut at the Fed's meeting in September and a second one in December.

Fed Governor Christopher Waller and Fed Vice Chair for Supervision Michelle Bowman have since said they felt rates could fall as soon as the July 29-30 meeting, but a recent stronger-than-expected jobs report has led investors to put the odds of an imminent rate cut at close to zero.

Powell's term as Fed chief lasts until May 15.

Source: Reuters

To stay updated on all economic events of today, please check out our Economic calendar

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Owen Li

Central Bank

Markets are once again high on ‘hopium’. Despite a still-strong labour market, sticky inflation, and an economy that refuses to roll over, rate cut bets have surged back into vogue. The Federal Reserve might be saying “higher for longer,” but investors are dancing to a different beat.

Why is the market so convinced cuts are coming when the data tells a different story?

The disconnect: strong data, dovish pricing

Let’s start with the basics. The US economy continues to defy gravity:

Unemployment is near historic lows.
Core inflation remains above the Fed’s 2% target.
Consumer spending is showing resilience, even if cracks are emerging.
Wages are still growing, and the services sector refuses to cool.
Risk assets are elevated (credit spreads are tight and equities are at highs).
The Atlanta GDP estimate is now at 2.8% in real terms.
Although tariffs have been meaningfully reduced, the net effective tariff has increased from approximately 2% to 12%, and the impact of this change is yet to be felt.

Source: Visual capitalist, US Census Bureau, US International Trade Commission, Tax foundation

And yet, futures markets are entertaining the idea of 150 basis points in cuts by the end of 2026. You’d be forgiven for thinking a recession was imminent, but the data simply doesn’t support it. There is no clear and present danger requiring immediate monetary easing. It appears as though an asymmetry is creeping into the market.

Source: Bloomberg

A caveat on the impact of this monumental change in tariffs is that they will impact both inflation and growth going forward, muddying the waters and making the Fed’s job even more challenging.

Have markets lost faith in the Fed’s reaction function?

The Fed’s traditional response function (think Taylor rule) is simple: respond to inflation and unemployment.

But what if that framework is breaking down? What if the central bank is now facing a third variable it can’t ignore: government debt sustainability?

Public debt-to-GDP has ballooned. Servicing costs are rising fast. Higher rates have doubled (or more) the cost of new borrowing.

The question is no longer just “is inflation too high?” or “is growth slowing?”, it’s becoming: “can we afford to keep rates this high?”

Is the Fed becoming politicised, and having its hand forced by the high debt load?

There’s a growing theory that debt sustainability is starting to influence monetary policy, if not overtly, then tacitly:

Net interest costs are now the second largest expenditure item after social security.
The higher rates go, the higher the interest expense becomes. Let’s not forget that the US government needs to roll c.$10 trillion in debt over 2025 and 2026 (see chart below). This amount is significant, possibly more so as US exceptionalism is increasingly being questioned.
There’s political pressure to “do something”, and cutting rates is perceived as easier than raising taxes or slashing spending. Given the US’s exposure to rollover risk1, the government will benefit significantly from lower administered rates.
Donald J. Trump has heaped schoolground pressure on ‘too late Powell’, threatening to fire him: “I can do a better job, perhaps I should”, “he’s a loser, not very smart”.
Lining up a ‘shadow Fed chair’ will likely render Powell’s final months redundant, or at the very least, make his job more difficult. With Powell’s position of Fed chair coming to an end in May 2026, much more weight will be placed on his successor. In fact, some hopefuls have been dusting off their CVs and calling for rate cuts despite the data, no doubt raising their standing in Trump’s eyes.

Source: Bloomberg

While the Fed remains technically independent, the economic reality is putting it in a box. Rate hikes were politically feasible when inflation was the villain, but as that narrative softens, so too does the Fed’s room to manoeuvre.

This raises a disturbing possibility: maybe the market isn’t mispricing rate cuts, maybe it is betting on fiscal dominance and a more politicised Fed. That is, central banks may eventually bow to the needs of the government balance sheet and the wants of an incumbent government, rather than to strict macro fundamentals.

What The Fed does next may no longer be about data alone. It may be about debt. If so, we’re entering a new regime: one where traditional models of inflation and employment lose their predictive power, and monetary policy becomes a servant, not a master.

So when the market prices in cuts against a backdrop of strong economic data, maybe it’s not madness. Maybe it’s a grim kind of foresight: the Fed is trapped, and the old playbook has been thrown out.

One thing’s for sure: if the Fed is no longer fighting inflation, but instead grappling with the math of Treasury auctions, then it’s not just rates that need re-pricing, it’s the entire framework we’ve relied on to understand monetary policy for the last 40 years.

Source: Zero Hedge

Risk Warnings and Disclaimers

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Adam

Cryptocurrency

A recent survey by the Kraken crypto exchange shows that a whopping 84% of crypto investors have made investment choices due to FOMO -- fear of missing out. It's a common response, especially in the speculative and volatile world of cryptocurrencies, where assets can rally significantly in a matter of days.

Unfortunately, FOMO-based choices often lead to regret. Almost two-thirds of the crypto holders surveyed said those emotional decisions had hit their portfolios hard.

FOMO can cause people to buy a cryptocurrency shortly before it hits an all-time high and then lose money when the price drops. It can also mean buying into pump-and-dump schemes that play on people's emotions.

Here are four tips you can follow to avoid letting fear cloud your judgment.

Research... and research some more

Another popular crypto acronym is DYOR -- do your own research. Don't take other people's word for it -- dig into the details of any project before you make the decision to buy. Cryptocurrencies don't have balance sheets and regulatory reporting systems, but there's still a lot of information you can use.

Read the white paper: This document should tell you what the project hopes to achieve, how the technology works, who's involved, and more. If you're looking for long-term value, real-world utility and security are key considerations.

Understand how coins and tokens are issued: Pay attention to how many coins or tokens the project will mint -- particularly whether there's a capped or unlimited supply. This can have a big impact on value. Look at the coins' distribution, any vesting (where coins are gradually released to stakeholders), and whether a small number of people own a large portion of the total supply.

Check out the leadership: Look for teams with solid crypto experience and knowledge. The number of developers involved in the project can also be a good sign. If it is a decentralized entity like Bitcoin (CRYPTO: BTC), pay attention to governance protocols and stakeholders.

Look at the market cap and liquidity: Cryptocurrencies with higher market caps may be more established and can carry less risk. Trading volume can be a good indicator of liquidity as it shows there are a lot of people buying and selling.

Research is one of the best antidotes to FOMO because it helps you make a decision that's based on information rather than emotion.

Be clear about why you're making an investment

Think about how this purchase fits in with your investment strategy and your finances, and be aware of emotional drivers. If you're feeling anxious or worried that you have to buy before the price changes dramatically, this may be a sign you're about to FOMO in or out of an asset. Similarly, if you're using money you need in the short term to buy crypto, take it as a FOMO warning sign.

You might even write down your investment thesis so that you can come back to it in the future. Keep your other investments in mind and be aware of how much exposure you have to risky assets like crypto, compared with other assets, such as stocks, bonds, and real estate.

Consider dollar-cost-averaging -- making regular investments at set intervals, rather than a lump sum -- to even out short-term volatility. This can help if a crypto is rapidly gaining in value and you're worried it might peak and fall again. It's also good to ask yourself what you hope the coin or token will be worth in five years' time.

Avoid decisions based on social media

Kraken's research shows that 85% of people who relied on social media for information also felt emotional decisions had hurt their portfolios. The emotionally charged and fast-paced nature of social media platforms can fuel FOMO.

You might get ideas from social media, but use other sources to verify what you find. Try to think about who's posting and what their agenda might be. That's particularly true on social media but also the case for articles, podcasts, and other investment information sources.

Take a beat

There are many great long-term investment opportunities out there, and it's almost impossible to time the market and buy at the lowest point. If it's a good investment today, it should still be a good investment in a week or a month after you've had time to think about it.

For example, let's say you wanted to invest in Bitcoin a few years ago. It's September 2021, and the price is about $46,000. The price is rising quickly, and you're scared it's going to the moon without you.

You wait a month, and by October, a single Bitcoin costs $56,000. It feels expensive, but you go ahead and buy because you've done your research and believe this is a solid long-term investment. Today, your investment would have gained more than 85%. And if Bitcoin continues to gain, the different entry points will become even less important.

You can take FOMO out of your crypto investments

There are several strategies to reduce FOMO in your investments, but the biggest one is awareness. If you catch yourself thinking you have to buy something today or miss out, that's a sign your emotions may be in the driver's seat. It happens all too easily in the heady world of crypto, so try to counter that sense of panic by imagining how you'd feel if you lost everything you're about to invest.

Don’t miss this second chance at a potentially lucrative opportunity

Ever feel like you missed the boat in buying the most successful stocks? Then you’ll want to hear this.

On rare occasions, our expert team of analysts issues a “Double Down” stock recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:

Nvidia: if you invested $1,000 when we doubled down in 2009, you’d have $410,385!*

Apple: if you invested $1,000 when we doubled down in 2008, you’d have $39,857!*

Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $695,481!*