Nvidia starts $5 trillion club, Fed cuts rates, Wall Street retreats; ASX set to slide

In the meantime, the deluge continues of big US companies reporting how much profit they made during the summer. The pressure is on to deliver growth because that’s one way they can quiet criticism that their stock prices have shot too high in recent months.

Teradyne soared 19.4 per cent for the biggest gain in the S&P 500 after the company, which makes automated test equipment and advanced robotics systems, reported stronger profit for the latest quarter than analysts expected. CEO Greg Smith credited strength related to artificial-intelligence applications and said “AI-related test demand remains robust.”

Nvidia, meanwhile climbed 2.4 per cent. It became the first company valued at $5 trillion on Wall Street, just three months after the AI darling was the first to break through the $4 trillion barrier.

Even Caterpillar, the company known for its construction and mining equipment, is feeling a boost because of AI. It rallied 11.4 per cent after reporting stronger profit and revenue for the latest quarter than analysts expected. The strongest growth came from Caterpillar’s business that provides equipment for the big data centers that are powering AI.

On the losing end of Wall Street was Fiserv, which plunged 43.8 per cent. The payments and financial technology company reported weaker profit for the latest quarter than analysts expected, slashed its profit forecast for the year and revamped its board of directors and leadership team. The stock is heading toward its worst day since it began trading in 1986.

Mondelez International fell 5.1 per cent, even though it reported stronger results than analysts expected. The company, whose brands include Oreo cookies and Toblerone chocolate, has been dealing with high inflation for the cost of cocoa. It expects challenging conditions to continue in some markets, though it hopes that price increases are moderating for cocoa.

In stock markets abroad, indexes were mixed in Europe following a stronger finish in Asia.

Tokyo’s Nikkei 225 jumped 2.2 per cent to another record. Seoul’s Kospi rose 1.8 per cent to its own all-time high after President Donald Trump met with South Korea’s leader following his visit in Japan.

Stocks rose 0.7 per cent in Shanghai ahead of a meeting between Trump and China’s leader, Xi Jinping. The world’s two largest economies have been locked in an escalating trade war, with Washington imposing high tariffs and tightened technology controls and China retaliating with curbs on rare earth shipments, one of its key sources of leverage.

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In the bond market, the yield on the 10-year Treasury rose to 4.05 per cent from 3.99 per cent late Tuesday as traders pared their bets for a coming cut to rates in December.

The Fed has been warning that it may have to halt cuts if inflation accelerates beyond its still-high level, because lower rates can worsen inflation.

Making an already tough course for Fed officials more difficult is the US government’s shutdown. That has delayed important updates on the economy that would normally help guide the Fed’s decision-making process.

AP