Fed Cuts 0.25%; Nvidia Tops $5T, Nasdaq Rally Now

Fed Cuts 0.25%; Nvidia Tops $5T, Nasdaq Rally Now

Thu, October 30, 2025

Fed Cuts 0.25%; Nvidia Tops $5T, Nasdaq Rally Now

Federal Reserve action and a historic Nvidia milestone reshaped trading dynamics: a policy move that calmed some rate fears while tech momentum, led by Nvidia, pushed the Nasdaq to fresh highs even as the S&P 500 and Dow 30 diverged.

Fed’s 0.25% Cut and Powell’s Caution

What changed on rates and the balance sheet

The Fed lowered its policy rate by 25 basis points and confirmed the planned end of quantitative tightening on December 1. That combination reduces near-term funding costs and halts further balance-sheet shrinkage, effectively removing one headwind for interest-sensitive equities and corporate borrowing.

Powell’s message: one step, not a path

Despite the easing move, Chair Jerome Powell emphasized that further cuts are not guaranteed and will depend on incoming economic data. In plain terms, policymakers provided relief but left the door open—creating a situation where investors must weigh both easier policy and the prospect of renewed tightening if inflationary signals reappear.

Nvidia’s $5 Trillion Milestone Drives Tech Strength

AI enthusiasm pushes Nvidia to a record valuation

Nvidia surged to an estimated $5 trillion valuation as continued demand for AI chips and data-center gear lifted investor confidence in the semiconductor and cloud-computing chains. That gain acted like a magnet for growth-oriented portfolios, concentrating buying power in large-cap tech names.

Indexes reacted unevenly

Tech-led strength propelled the Nasdaq to record closes, but the S&P 500 and Dow 30 did not uniformly follow. The divergence reflects different sector exposures: the Nasdaq is heavily weighted toward high-growth tech firms, while the S&P 500 and Dow include more cyclical and industrial firms that are sensitive to interest-rate uncertainty and geopolitical factors.

Investor Sentiment and Probabilities

Expectations for future rate moves

Following the Fed announcement, traders priced a substantial—but not certain—chance of another cut by year-end. Pricing models and fed-funds futures suggested a high probability for an additional reduction, yet Powell’s caution kept those odds from being treated as a done deal. In effect, risk appetite rose for some assets while volatility stayed elevated in others.

Practical takeaway for traders

Short-term traders may find opportunities in tech momentum and rate-sensitive sectors, but portfolios should account for potential reversals if inflation data surprises. Diversification across sector exposures—growth, value, and cyclicals—remains a prudent way to navigate mixed signals.

What This Means for S&P 500, Dow 30 and Nasdaq Participants

Nasdaq: concentrated gains

The Nasdaq benefited most from the tech rally, driven by the largest-cap chip and cloud players. When a handful of megacaps move sharply, they can lift the index even if many smaller constituents lag.

S&P 500 & Dow 30: broader divergence

The S&P 500 and Dow 30 reflected a mixed picture: companies tied to industrial activity, energy and financials reacted differently than high-growth tech firms. That split underscores the importance of checking sector weights when interpreting index performance.

Conclusion

The Fed’s 0.25% rate cut and confirmation of an end to quantitative tightening in December provided immediate policy relief, but Chair Powell’s cautious tone kept the path forward uncertain. Nvidia’s climb to an estimated $5 trillion valuation turned attention—and capital—toward AI and large-cap tech, helping the Nasdaq post record closes while the S&P 500 and Dow 30 showed mixed results. Traders and investors should expect continued dispersion across sectors: growth-oriented indexes may extend gains if AI optimism persists, while cyclical and value-heavy names will react more to macro data and future Fed guidance. Maintain diversified exposure and monitor incoming inflation and employment releases closely to adjust positioning as new data arrive.