Tech-heavy Nasdaq advances as Alphabet hits US$3trn; TikTok deal nears

Stocks on Wall Street started the week on an upbeat note ahead of an expected rate cut from the US Federal Reserve on Wednesday, with the tech-heavy Nasdaq Composite advancing today as Google-parent Alphabet hit the US$3 trillion mark and Tesla gained on news Elon Musk has been buying shares, offsetting declines for Nvidia, which has riled up Chinese regulators.

Meanwhile, a deal on TikTok’s US business seems near after negotiations found a framework on how to proceed, with US President Donald Trump and his Chinese counterpart Xi Jinping expected to discuss the social media platform’s future on Friday.

Trump also pushed for less onerous listed-company reporting, taking to his Truth Social platform to say quarterly reporting should be dumped for a six-monthly cycle, an idea that found favour with Nasdaq chief executive Adena Friedman.

And gold continues to push higher, with the precious metal eclipsing US$3,700 an ounce as traders get themselves ready for the Fed meeting on Wednesday and Wall Street’s fear gauge ticking a little higher.

Easier interest rates

Stocks on Wall Street continued to press higher into record territory ahead of the Federal Reserve’s policy review on Wednesday in the US, which is widely expected to see the federal open market committee cut the key rate by a quarter point, with an outside chance of an even steeper 50 basis point reduction.

“Ahead of the Fed’s near-certain rate cut later this week, markets appear to already be factoring in the restarting of an easing cycle, with US equities rising to a fresh record high, alongside a modest fall in US Treasury yields and a broadly weaker US dollar,” Bank of New Zealand senior markets strategist Jason Wong said in a note. “Strong equity markets aren’t confined to the US market, with the MSCI Asia Pacific index and European bourses close to breaking record highs and Japan’s Nikkei index hitting a record yesterday.”

The Nasdaq Composite was up 0.8% in late trading, with tech companies’ valuations typically more sensitive to interest rates, while the S&P 500 was up 0.4% and the blue-chip Dow Jones Industrial Average 0.1%.

Gold futures rose 0.8% to US$3,716 an ounce at 7am in Auckland as the precious metal remains elevated ahead of the Fed’s policy meeting. The CBOE’s volatility index, known as Wall Street’s fear gauge, crept up 7.8% to 15.82 in late trading.

Google-parent Alphabet extended its gains since the favourable antitrust court ruling earlier this month, with the search engine giant crossing the US$3 trillion market capitalisation mark for the first time. Alphabet was up 3.5% in late trading.

Tesla buying

Meanwhile, Tesla was up 3.4% after filings showed chief executive Elon Musk bought US$1 billion of the electric vehicle firm’s stock ahead of an annual meeting where shareholders will vote on supersizing his pay packet.

Nvidia was marginally weaker after Chinese regulators said an initial probe found the chipmaker broke antimonopoly law in its 2020 acquisition of Israel’s Mellanox Technologies for US$7 billion.

That comes as US Treasury secretary Scott Bessent found common ground with Chinese negotiators over the future of Chinese social media giant TikTok’s US operations, with presidents Donald Trump and Xi Jinping set to discuss the platform’s future on Friday.

Separately, Trump took to his Social Truth platform to say public companies shouldn’t have to file earnings on a quarterly basis, preferring a six-monthly cycle that lets management focus on running their businesses.

The US president’s comments echo a proposal put forward by the Long-Term Stock Exchange, which last week said it would lobby the Securities and Exchange Commission for a relaxation on quarterly reporting, and found favour with Nasdaq chief Adena Friedman.

Across the Atlantic, markets were broadly stronger, although the UK’S FTSE 100 dipped 0.1%. Germany’s DAX 30 rose 0.2% and France’s CAC 40 advanced 0.9%.

Australian futures are pointing to 0.3% gain for the S&P/ASX 200 index when trading opens across the Tasman, while the kiwi dollar traded at 59.72 US cents at 7am in Auckland from 59.65 cents yesterday.

Contact Energy will hold its annual meeting in Auckland this morning, while local data today include partial inflation readings for the month of August.

A softer BNZ-BusinessNZ performance of services index yesterday raised questions about whether the economy will bounce back as quickly as some forecasters had previously hoped.

Reporting by Paul McBeth. Image from Solen Feyissa on Unsplash.