Nasdaq 100 Hits Record High on AI Surge as Rate Cut Odds Jump 50 Bps

Tech giants ride artificial intelligence wave to unprecedented valuations while traders bet big on Fed pivot.

The AI Gold Rush

Nasdaq's record run isn't just numbers on a screen—it's a full-scale speculative frenzy around machine learning capabilities. Every tech CEO suddenly has an AI strategy, and investors are throwing money at anything with 'neural' or 'algorithm' in the description.

Rate Cut Reality Check

Traders are pricing in monetary policy easing like it's going out of style. The 50 basis point shift in expectations shows just how desperately markets want cheaper money—never mind that strong AI earnings might actually argue against cutting rates.

Wall Street's Latest Narrative

Because nothing fuels market optimism like the combination of speculative technology and anticipated liquidity injections. Who needs fundamentals when you've got buzzwords and central bank put options?

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Nvidia (NVDA), the largest component in the tech index with a 13.79% weight, has risen by 6% during the past five days, bringing its year-to-date return to 29%. Semiconductor competitor Broadcom (AVGO), with a 5.50% weight, has fared even better with a 2025 return of 58%.

Labor Market Weakness Spurs 50 Bps Rate Cut Odds

This morning, the Labor Department announced that initial jobless claims for the week ended September 6 grew by 27,000 to 263,000, well above the consensus estimate of 235,000. Initial jobless claims are now at their highest level since October 2021.

The Fed has more incentive to cut rates with a weaker labor market, as cheaper borrowing costs can lead to economic growth. The odds of a 50 bps rate cut at the FOMC meeting later this month now stand at 11.1% compared to 8.9% yesterday and 0% a week ago, according to CME’s FedWatch tool.