AI-fueled tech rally powers Nasdaq as Amazon’s cloud momentum draws bullish calls; Nvidia whipsaws, ECB warns on stablecoins
U.S. equities advanced with high beta tech in the lead, as optimism around artificial intelligence reignited risk appetite and chip shares surged. Amazon drew fresh buy-side interest on expectations of heavier AI infrastructure spend and accelerating AWS sales, while Nvidia’s post-earnings swing underscored fragile positioning ahead of the Federal Reserve’s next policy decision.
Wall Street closes higher on AI, softer yield backdrop – Nasdaq Composite jumped 2.69%, S&P 500 rose 1.55%, and the Dow added 0.44%. – The Philadelphia Semiconductor Index rallied 4.63% as the AI trade reasserted leadership. – Software outperformed on hopes the rate cycle is peaking; Health Catalyst climbed 8.3% and Unity gained 7% amid upbeat AI headlines tied to Gemini 3 developments.
With Treasury yields easing at the margin, equity duration regained favor and liquidity rotated into growth. Traders described flows as momentum-driven, with market breadth improving but still concentrated in mega-cap technology where valuations remain elevated relative to historical multiples.
Amazon’s AI capex in focus; Street eyes up to 40% upside Amazon shares were bid after new sell-side work highlighted stronger cloud spending cycles and a deepening AI services pipeline. AWS revenue climbed to roughly $33 billion in the latest period, and the company is expected to lean into AI infrastructure with as much as $50 billion of related capex over the coming phases, according to street estimates.
Bank of America and BNP Paribas reiterated bullish stances, flagging potential upside of as much as 40% if AWS monetization of AI workloads scales as anticipated and retail margins continue to normalize. The key debate on the desk remains valuation: multiple expansion has already repriced growth and execution risk, leaving the next leg reliant on sustained AI-driven demand, accelerating backlog, and capex translating into throughput and margin leverage.
Nvidia’s snapback shows fragile positioning Nvidia initially surged on strong prints before reversing sharply, a pattern traders attributed to crowded positioning, elevated implied volatility, and brisk gamma dynamics around popular options strikes. The reversal highlights thin catalysts into the next Fed meeting and a market hypersensitive to guidance language, data center backlog visibility, and inventory signals across the AI supply chain.
Macro setup: “catalyst-lite” before the Fed Rates markets are largely rangebound as investors wait for the Fed’s policy statement and updated assessment of inflation persistence. Front-end pricing implies a prolonged pause, keeping a lid on FX volatility for now. Equity bulls are leaning on the soft-landing narrative and disinflation trend, but valuation and positioning risk remain key if growth prints or guidance miss.
Australia’s consumer mood remains weak In Asia-Pacific, Australia’s weekly consumer confidence index held at a subdued 87.1, underscoring tepid household demand amid higher mortgage costs. The soft read keeps the Reserve Bank of Australia cautious; AUD sentiment remains sensitive to global risk appetite and local growth downside risks.
ECB flags stablecoin run risk The European Central Bank warned that the $307 billion stablecoin market could pose financial stability risks, noting the sector’s holdings of short-dated U.S. Treasuries via leading tokens such as Tether and USDC. The ECB cautioned about potential run dynamics during stress episodes and the need for robust liquidity management. The commentary tightened the regulatory lens on crypto-linked money market exposures, a theme watched closely by cross-asset desks.
Crypto: XRP pops on ETF headlines XRP jumped roughly 9% amid headlines around a new ETF launch tied to Franklin Templeton and strong debut flows into a Canary-branded product that drew about $58 million, a segment record according to provisional figures. The move stoked broader crypto risk appetite in a session already underpinned by tech strength, though traders flagged headline risk and regulatory uncertainty as ongoing dampers on sustained inflows.
Market Highlights – Nasdaq +2.69%, S&P 500 +1.55%, Dow +0.44%; SOX +4.63% on broad chip gains – Amazon draws fresh bullish calls; AWS revenue near $33B, AI capex seen up to $50B – Nvidia swings post-earnings as positioning and options flows amplify volatility – Australia weekly consumer confidence stuck at 87.1, underscoring demand headwinds – ECB warns stablecoins could trigger run risk; crypto sentiment lifted as XRP +9%
What are investors watching next? – The Fed meeting: guidance on inflation progress, balance sheet runoff, and any hints on the path of policy normalization. – AI capex cadence: hyperscaler spending plans, cloud backlog, and semiconductor supply-demand alignment. – Macro prints: U.S. labor data and inflation updates, plus China growth signals and European PMIs for clues on global demand.
Why is Amazon attracting renewed optimism? Analysts cite a strengthening AI workload pipeline at AWS, an expanding suite of AI services, and the potential for outsized infrastructure returns if utilization rates rise. Banks including Bank of America and BNP Paribas see further upside contingent on execution and margin leverage across cloud and retail.
What explains Nvidia’s rapid post-earnings reversal? Crowded longs, elevated implied volatility, and options-related flows can amplify price moves around earnings. With limited near-term catalysts and a heavy positioning backdrop, profit-taking can flip momentum quickly, especially when guidance is parsed as less than incrementally bullish.
How could the ECB’s stablecoin warning affect markets? If regulators push for stricter liquidity and asset-liability matching, stablecoin issuers may need more conservative collateral practices, potentially affecting liquidity flows across crypto markets. A disorderly episode could spill into money-like instruments, which is why the ECB is highlighting run risks.
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