Stock market today: Chipmakers lead tech surge ahead of Fed rate decision

• US stocks surged as chipmakers lifted tech shares ahead of the Federal Reserve's rate decision.
• Investors expect the Fed to hold rates steady but anticipate a cut in September.

US stocks surged on Wednesday, led by a rally in the tech sector as investors anticipated the Fed's next rate move. All three benchmark indexes were higher, while bond yields slumped.

The tech-heavy Nasdaq Composite rose more than 2% in early trading, with chip darlings Nvidia and AMD both rallying roughly 10%. The move comes on the heels of a blockbuster earnings report from AMD, as well as Morgan Stanley re-raising Nvidia to its top stock pick in the semiconductor space.

Federal Reserve officials are set to conclude their July policy meeting this afternoon. All eyes will be on Fed Chair Powell, who is expected to issue guidance on rate cuts in prepared remarks.

Traders are expecting the Fed to hold interest rates steady this month, but are pricing in a 100% chance the Fed will cut rates at least 25 basis-points in September, according to the CME FedWatch tool.

"Tonight's press conference from Fed Chair Jerome Powell may provide a catalyst for the next move. While the Fed is expected to leave rates unchanged tonight, the probability of a 50 basis point cut in September, rather than 25 basis points, has been rising of late," David Morrison, a senior market analyst at Trade Nation said in a note.

"The Fed has to thread a needle today," Thierry Wizman, a rates strategist at Macquarie, added. "A too-strong signal of a coming September rate cut may scare traders into thinking that the Fed sees abrupt economic weakness ahead. A too-weak signal, where a rate cut hinges on the data 'evolving as we expect' in the context of lingering attentiveness to inflation may not sound satisfactory to the bulls."

Here's where US indexes stood shortly after the 9:30 a.m. opening bell on Wednesday:

• S&P 500: 5,498.72, up 1.2%
• Dow Jones Industrial Average: 40,746.68, up 0.1%
• Nasdaq composite: 17,452.57, up 1.8% (302 points)

Here's what else is going on today:

• CrowdStrike extended its post-outage losses to 34% after Delta said it hired a lawyer to seek compensation.
• The bull market rally in stocks is bound to extend into 2025, according to Ned Davis Research.
• The market is flashing signs of a dangerous debt bubble with losses that could be 'contagious,' according to one economist.

In commodities, bonds, and crypto:

• West Texas Intermediate crude oil climbed 3.12% to $77.08 a barrel. Brent crude, the international benchmark, rose 2.93% to $80.36 a barrel.
• Gold was higher 0.43% to $2,418.50 per ounce.
• The 10-year Treasury yield dropped three basis points to 4.10%.
• Bitcoin remained flat at $66,284.