Dow and S&P 500 Close at Record Highs as Nvidia Shares Dip and Dollar Weakens

U.S. Benchmarks Break Records

The Dow and S&P 500 closed at record highs even as Nvidia shares dipped and the dollar weakened, underscoring the market’s ability to absorb tech headwinds while betting on Federal Reserve easing. The Dow Jones Industrial Average climbed 0.5% to finish at a fresh peak, while the S&P 500 rose 0.3%, reaching an all-time closing high above 6,500.

The rally extended a months-long trend of resilience in U.S. equities. Despite a slip in Nvidia shares after earnings, investors chose to focus on broader signals of strength, including softer inflation expectations and growing conviction that the Fed could cut rates as soon as September.

Nvidia’s China Exposure Weighs

Nvidia, the darling of the artificial intelligence trade, briefly rattled markets after its post-earnings outlook flagged uncertainty over Chinese demand. The company’s stock fell around 2%, dragging the Nasdaq lower intraday before broader market momentum took over.

Analysts stressed that Nvidia’s caution is less about its global AI business—which continues to boom—and more about policy uncertainty in China as Washington considers tightening chip export rules. For many investors, the selloff was a chance to reassess valuations rather than abandon the AI trade entirely.

Dollar Weakens on Fed Bets

Currency markets added fuel to the equity rally. The U.S. dollar weakened, reflecting growing consensus that the Fed will cut rates next month. Traders cited dovish comments from Fed officials and evidence that core inflation continues to cool.

A weaker dollar tends to boost risk assets globally by making U.S. equities more attractive and reducing pressure on emerging markets. Gold also benefited, holding near recent highs as investors sought a hedge against uncertainty.

Bond Market Holds Steady

U.S. Treasuries traded in a tight range as investors weighed the Fed’s next move. The 10-year yield remained near 3.9%, with traders reluctant to push yields lower before seeing Friday’s inflation data. Markets are betting heavily on at least one 25-basis-point cut by the end of September, but some strategists warn the Fed could wait until November if inflation surprises.

Global Spillover

The optimism spilled into Asian and European markets. Japan’s Nikkei opened higher, while the MSCI Asia-Pacific ex-Japan index gained modestly on the back of Wall Street’s record close. In Europe, futures pointed to a stronger open as traders anticipated a dovish Fed providing global liquidity support.

Chinese markets, however, remain under pressure from property sector worries and trade tensions with Washington. Analysts warn that U.S. restrictions on tech exports could weigh on Asian chipmakers, amplifying volatility.

Sector Performance

Within the U.S. market, gains were broad-based.

• Financials: Banks outperformed as higher lending volumes and a stable rate environment boosted outlooks.
• Energy: Oil-linked stocks benefited from crude prices stabilizing around $75 a barrel.
• Technology: Nvidia’s dip weighed on the Nasdaq, but Microsoft and Apple posted gains, offsetting losses.

The breadth of the rally reinforced confidence that the bull market is not reliant solely on AI hype.

The Bigger Picture

The Dow and S&P 500 hitting record highs while Nvidia shares dipped and the dollar weakened highlights a defining feature of 2025 markets: resilience. Investors are willing to absorb shocks in individual sectors so long as macro conditions—like cooling inflation and the prospect of Fed rate cuts—remain supportive.

As one Wall Street strategist put it: “The fact that markets are setting records despite Nvidia stumbling shows that the bull run is broadening out. This is no longer just an AI story—it’s a macro liquidity story.”

What’s Next

All eyes now turn to Friday’s U.S. inflation release, which will help determine the Fed’s trajectory. If inflation continues to ease, expectations of a September rate cut could harden, further lifting equities and weakening the dollar.

For Nvidia, the focus remains on whether China will tighten restrictions on U.S. chipmakers. Traders say any clarity on export rules could remove one of the biggest overhangs on the stock.

The bottom line: The Dow and S&P 500 closed at record highs as Nvidia shares dipped and the dollar weakened—sending a clear signal that optimism over Fed policy and resilient economic data is outweighing tech-specific risks.