By Caroline Valetkevitch
NEW YORK (Reuters) -Major stock indexes edged higher on Wednesday, with upcoming results from artificial intelligence leader Nvidia offsetting concerns about the Federal Reserve’s independence, and the dollar recovered from previous session’s drop.
A lawyer for Fed Governor Lisa Cook said she would file a lawsuit against U.S. President Donald Trump after he said he would fire her. Trump’s statement left some investors worried about the independence of the U.S. central bank.
Interest-rate sensitive two-year yields fell to an almost four-month low and the yield curve steepened as traders weighed the chance that Trump may be able to make more dovish appointments to the Fed.
Even so, the dollar rebounded from its drop in the previous session and was last up 0.36% at 147.93 Japanese yen, while the euro was down 0.48% at $1.1586.
The three major U.S. stock indexes were slightly higher, with Nvidia’s second-quarter report, due after the closing bell, seen as a test of the AI optimism that has propelled markets over the past couple of years.
“Trump has been on the Fed’s back since Day One, and this (Cook firing) is just a continuation of that strategy. The market is completely focused, 100%, on Nvidia,” said Jake Dollarhide, CEO of Longbow Asset Management in Tulsa, Oklahoma. Investors are wondering whether Nvidia’s results will continue to live up to Wall Street’s high expectations, he said. “My expectation is today it will.”
Technology shares, including several AI leaders, have wobbled this month with investors pointing to some signs of caution emerging in the sector.
The Dow Jones Industrial Average rose 93.12 points, or 0.20%, to 45,509.88. The S&P 500 climbed 10.61 points, or 0.16%, to 6,476.31 and the Nasdaq Composite advanced 33.25 points, or 0.15%, to 21,580.05.
European stocks rebounded slightly from the previous day’s decline, with investors monitoring political risks in France. Concerns over a potential collapse of French Prime Minister Francois Bayrou’s government next month sparked a selloff in French assets on Tuesday.
MSCI’s gauge of stocks across the globe rose 0.49 points, or 0.05%, to 953.21.
The pan-European STOXX 600 index was up 0.09%.
Market watchers interpreted Fed Chair Jerome Powell’s comments at the Fed’s annual Jackson Hole symposium last week as indicating interest rate cuts could be on the way. Fed funds futures traders are pricing in 88% odds of a cut in September, according to the CME Group’s FedWatch Tool.
But the outlook for U.S. interest rates is still likely to depend on labor market strength and inflation trends.
The two-year U.S. Treasury yield, which typically moves in step with interest rate expectations, was last at 3.654%, down around two basis points on the day. The benchmark 10-year note yield rose to 4.289% from 4.256%.
The yield curve between two-year and 10-year notes was last at 63.3 basis points, the steepest since April 22.
U.S. crude rose 0.79% to $63.74 a barrel and Brent rose to $67.64 per barrel, up 0.62% on the day.
(Reporting Caroline Valetkevitch in New York; additional reporting by Yoruk Bahceli, Ankur Banerjee and Dhara Ranasinghe. Editing by Mark Heinrich, Mark Potter and Richard Chang)
