Wall street extends pull back ahead of Fed policy; NVIDIA surged 0.8%

Wall Street extends its losses on Tuesday ahead of the crucial Federal Reserve’s policy outcome on Wednesday. Besides this, elevated crude oil levels and surging long-dated yields soured investor sentiment. The Dow Jones plunged over 370 points, near the previous week’s low. Meanwhile, the S&P 500 and NASDAQ 100 traded flat with a negative bias.

The US 10Y surged to July 2007 levels, indicating an impending rate hike and expected stagflation in the US economy. The US 30Y yields also surged over 5.4% on Tuesday, suggesting higher-for-longer interest rates and inflation. The CME Fed watch tool, which tracks expectations polled interest rate traders, now shows a 92.7% probability of an interest rate hike of at least 25 basis points.

Rate hike on cards

Meanwhile, Morgan Stanley and other major Wall Street banks are adopting a hawkish outlook on interest rates. Forecasting an interest rate hike by the US Federal Reserve and the European Central Bank. The bank expects a 25 basis point hike in the coming policy meeting and another in December.

Crude oil prices climbed over 1% on Tuesday as supply disruption worries kept investor sentiment on edge. Brent crude oil prices traded 0.8% higher at $107 per barrel, and WTI crude oil prices surged over 1.5% on Tuesday at $103.5 per barrel.

NVIDIA surges as Jensen Huang quashes AI extinction alarm

At the stock-specific level, the shares of NVIDIA surged as much as 1% on Tuesday after CEO Jensen Huang abated the fears around AI advancement. He further assured people not to worry about AI advancements and quashed the remarks about the pace of AI models made by Dario Amodei, Sam Altman, and Elon Musk. Following Jensen Huang’s confidence, the chip-making stocks like AMD, Intel Corp, and Micron surged as much as 3% during Tuesday’s session.

Megacaps bleed

Among the megacaps, shares of Alphabet, Amazon, Microsoft, SpaceX, and Meta Platforms continued their weak trend, extending their losses by as much as 2%. The AI hyperscalers will be in particular focus after CEOs of AI companies call for pacing out AI advancements, souring the sentiment for hyperscalers as they plan nearly $1 trillion in capex on AI infrastructure. Meanwhile, Jensen Huang’s