US stock markets reached unprecedented levels on Tuesday, with major indices hitting new records amid a tech-driven rally and anticipation of the Federal Reserve's upcoming decision.

Market Performance

The US benchmark indices showcased impressive gains:

Tech Giants' Milestones

Nvidia's Remarkable Surge

Nvidia led the market rally with a 5% gain, pushing its market capitalization close to the $5 trillion mark. The company's CEO, Jensen Huang, made several significant announcements at Nvidia's GTC conference:

• A $1 billion stake purchase in Nokia, causing Nokia shares to surge 22%
• Partnerships with the US Department of Energy for seven new supercomputers
• Relocation of Blackwell GPU manufacturing from Taiwan to Arizona

Apple's Trillion-Dollar Milestone

Apple crossed the $4 trillion market cap threshold, joining an exclusive club with Nvidia and Microsoft. Key highlights include:

• Nearly 60% stock gain from April lows
• $1.4 trillion addition to market value
• 14% increase in iPhone 17 sales compared to iPhone 16 in the first 10 days

Economic Outlook

The Federal Reserve's upcoming decision is highly anticipated:

• Expected 25 basis point rate cut
• Further cuts anticipated in December and January
• CNBC survey indicates 80% of respondents believe AI-linked stocks are overvalued

Earnings on the Horizon

Tech giants Microsoft, Alphabet, and Meta are set to report quarterly results. The "Magnificent Seven" companies are expected to show 14% profit growth, outpacing the overall S&P 500 components' projected 8% growth.

As the market reaches new heights, investors should remain cautious of potential overvaluation in certain sectors, particularly AI-linked stocks. The upcoming Fed decision and earnings reports from major tech companies will likely play crucial roles in shaping market sentiment in the near term.

Peter Cardillo, Chief Market Economist at Spartan Capital Securities, has weighed in on recent market developments, offering insights on proposed tariffs and the continued strength of artificial intelligence (AI) investments.

Trump's Pharma Tariffs: A Negotiation Strategy

Cardillo characterized Trump's proposed 100% tariffs on patented drugs as unsurprising negotiation tactics rather than permanent policy. "The tariffs are absolutely ridiculous," Cardillo stated, warning that such measures would force manufacturers to shut down. He anticipated pushback from exporting nations, suggesting that the proposal is more of a bargaining chip than a definitive policy direction.

AI Investment Momentum Continues

On the technology front, Cardillo noted the persistent strong investor appetite for artificial intelligence. He observed substantial money flowing into the AI sector, indicating continued confidence in the potential of AI-related investments.

Economic Indicators and Market Outlook

Commenting on recent economic data, Cardillo described the strong GDP revision numbers as "old news." He attributed the second-quarter growth to unusual trade flows ahead of tariff deadlines, suggesting that this level of growth is unlikely to repeat.

Cardillo also warned of potential market volatility in the near term. He cautioned that if the upcoming PCE (Personal Consumption Expenditures) inflation data comes in higher than expected, combined with the recent tariff announcements, it could negatively impact markets. The economist predicted that market volatility is likely to persist until uncertainties surrounding the tariffs are resolved.

Conclusion

While the AI sector continues to attract significant investment, the broader market faces potential headwinds from proposed tariffs and upcoming economic data releases. Investors and market participants will be closely watching how these factors unfold in the coming weeks.