Nvidia hits $5t as Fed rate cut boosts Dow Jones rally

Tech-driven optimism meets policy easing

Markets erupted this week after Nvidia achieved a historic $5 trillion valuation, underscoring the relentless appetite for AI-driven growth. The milestone sent shockwaves across global equities, with major indices—led by the Nasdaq and Dow Jones—posting fresh rallies.

Adding fuel to the move, the Federal Reserve cut interest rates by 25 basis points, lowering the policy rate to 3.75%–4.00%, its second cut of 2025. The move, widely expected, was aimed at countering cooling labor data and maintaining credit stability amid a delicate post-shutdown recovery.

Yet, Chair Jerome Powell’s tone was cautious. He emphasized that further easing in December would depend entirely on data. That “optional” language—neither dovish nor hawkish—tempered the euphoria slightly, keeping yields steady and reminding traders that policy support isn’t infinite.

Even so, the synergy between tech momentum and easier policy has created a fertile backdrop for risk assets. For the Dow Jones Industrial Average, which blends industrial resilience with tech exposure, the setup remains structurally bullish—albeit with near-term volatility as the index rebalances from recent highs.

Nvidia’s $5 trillion milestone: The symbol of market confidence

Nvidia’s leap past $5 trillion in market cap represents not just a record but a paradigm shift. It confirms that the AI infrastructure boom—encompassing chips, data centers, and generative computing— isn’t hype; it’s a new industrial revolution.

This single event has had ripple effects across global markets:

• It anchors investor sentiment, validating AI as the dominant equity narrative of this cycle.
• It reinvigorates global risk appetite, particularly for growth sectors and U.S. tech stocks.
• It lifts index valuations, as Nvidia’s rally mechanically contributes to the weighting of major benchmarks.

While the Nasdaq benefits the most from Nvidia’s rise, the Dow Jones gains indirectly—as AI optimism supports cyclicals, semiconductors, and cloud-driven industrials within its composition.

Fed rate cut: Tailwind, but with a caveat

The October Fed rate cut provided the liquidity backdrop markets were hoping for—but the tone accompanying it was crucial. Powell’s refusal to commit to more cuts introduced uncertainty into an otherwise risk-on setup.

From a structural standpoint:

• Lower rates enhance borrowing capacity and lift corporate valuations.
• Policy caution, however, tempers expectations, creating a conditional optimism dependent on economic data.
• As such, the market response was balanced—a short-term relief rally with mid-term vigilance.

For the Dow, this means an asymmetric advantage: policy support aids industrial and cyclical stocks, while the AI-led rally strengthens the tech component. The only risk? Overvaluation if the Fed shifts back toward restraint.

Technical outlook

The Dow Jones (US30) continues to exhibit bullish structure following a major impulse leg post-Fed and Nvidia headlines. On the daily timeframe, two overlapping Fair Value Gaps (FVGs) and a Daily Order Block between 47,100–46,700 now act as the key reaccumulation base.

The H4 chart reflects a controlled retracement from 48,200–48,400, suggesting the market is in the process of rebalancing prior to another expansion phase. Price remains comfortably above its structure base, reinforcing the broader bullish tone.

The key takeaway: momentum remains intact, but the market may first mitigate imbalances before continuation—a healthy consolidation phase within an overall bullish trend.

Bullish scenario: Retest and expansion above 48,400

If the Dow holds above the stacked FVGs and Order Block:

• A retest of 47,600–47,100 could act as a springboard for another expansion phase.
• A bullish market structure shift (MSS/iFVG) in these zones would confirm reaccumulation.
• Upside momentum could resume toward 48,800–49,200, with a potential extension to 49,500–50,000 if yields remain soft and AI enthusiasm persists.

Bullish confluences:

• Strong reaction from the 47,100–46,700 liquidity pocket
• FVG mitigation confirmed by higher low formation
• Sustained global equity strength led by tech

Upside targets:

• Primary: 48,800
• Extended: 49,500–50,000

Bearish scenario: Failure to hold demand base

Should the index fail to defend the 47,000 support area:

• A clean break below 46,700 would invalidate the bullish framework.
• The next liquidity pocket sits near 46,200–45,800, aligning with deeper reaccumulation zones.
• A hawkish Fed narrative or renewed yield surge could accelerate this move.

Bearish confluences:

• Rejection from 48,200 resistance
• Breakdown through 47,000 and loss of FVG structure
• Weak risk sentiment or rotation into defensive sectors

Downside targets:

• Primary: 46,200
• Extended: 45,800

Final thoughts

This market is powered by two simultaneous catalysts — AI euphoria and policy easing. Nvidia’s record valuation has become a global sentiment barometer, while the Fed’s cut has reintroduced liquidity into an economy still balancing post-shutdown risks.

For the Dow, this blend of tech momentum and macro support provides fertile ground for sustained upside, but traders should remain data-sensitive. Powell’s “optional” December cut leaves plenty of room for volatility if inflation or employment surprises ahead.

In short, the trend remains your ally, but with liquidity rebalancing underway, precision matters more than aggression. The next move belongs to the market’s reaction at the FVG base — where smart money will make its stand.