On September 27, 2026, the US stock market continued its volatile upward trend, driven by expectations of a Federal Reserve policy shift. The Nasdaq Composite Index briefly broke through the 17,000-point mark during the session, hitting a new all-time high and becoming the strongest-performing index among the three major indices. The tech sector led the market rally, with stock prices of tech giants like NVIDIA and Tesla continuing to rise, boosting the valuation of the entire sector. Meanwhile, the Dow Jones Industrial Average and the S&P 500 showed more moderate performance, rising 0.3% and 0.5% respectively, highlighting the divergence in the market's internal structure.
Looking at market drivers, the recent signals of a potential rate cut from the Federal Reserve are the core force behind the US stock market's rebound. Fed Chair Powell indicated at the September FOMC meeting that inflationary pressures are showing signs of easing and that future rate cuts may be considered to support economic recovery. This statement boosted market expectations for an accommodative monetary policy, making risk assets more attractive. In particular, tech stocks, as representatives of growth assets, are more sensitive to interest rate changes. The rising expectations of a rate cut have allowed their valuations to recover, becoming the main direction for capital inflows.
However, the phenomenon of market divergence is becoming increasingly apparent. Traditional sectors such as energy and finance are performing weakly, while growth-oriented sectors like technology and healthcare are continuing to strengthen. This divergence reflects different investor expectations for the path of economic recovery: on one hand, tech stocks benefit from the rapid development of emerging technologies like AI and cloud computing, with strong and certain earnings growth; on the other hand, traditional industries face transformation pressures and weak earnings growth, leading to capital flowing from traditional sectors to growth-oriented ones.
Looking more closely, there is also divergence within the tech sector. As a leader in AI chips, NVIDIA's stock price hit a new high, mainly due to its Q3 earnings report exceeding expectations and the market's optimistic outlook for its AI business growth. Tesla's stock price benefited from increased production capacity and a rebound in market demand, rising by over 2%. In contrast, some companies in the semiconductor sector performed flat, reflecting market concerns about chip demand. This internal divergence suggests that investors should still focus on the fundamentals and industry position of individual stocks, even as the tech sector as a whole strengthens.
The impact of the Fed's policy shift on the US stock market is not only reflected in short-term volatility but also in a change in long-term allocation logic. Over the past decade, the US stock market has benefited from a low-interest-rate environment, with tech stocks becoming the leading sector. However, as the Fed enters a rate-cutting cycle, assets sensitive to interest rates will see valuation recovery opportunities, while traditional industries may benefit from economic recovery. For Asian investors, this policy change means they need to adjust their asset allocation strategies, increasing their allocation to tech stocks and growth-oriented assets, while also paying attention to valuation recovery opportunities in traditional industries.
In terms of capital flows, Asian investors have been accelerating their allocation to US stocks recently. According to the latest data, the scale of funds flowing into the US stock market from Asian high-net-worth families through channels like the Stock Connect program and US stock ETFs has reached a new high for the year. This trend is driven by a dual factor: the safe-haven attribute of the US dollar and the tech dividend. On one hand, as the world's reserve currency, the US dollar still holds safe-haven value amid increasing economic uncertainty. On the other hand, the earnings growth and valuation advantages of tech stocks attract long-term allocation from Asian investors.
However, market risks still exist. The timing and magnitude of the Fed's rate cuts remain uncertain. If inflation rebounds or economic data exceeds expectations, it could lead to unmet rate cut expectations and trigger market adjustments. Furthermore, the high valuations of tech stocks also face correction risks, especially as some companies' valuations are already at historical highs, requiring caution against bubble risks. When allocating to US stocks, Asian investors should focus on diversification, avoid concentrating holdings in a single sector or stock, and pay close attention to macroeconomic data and policy changes to adjust their positions in a timely manner.
Looking ahead, the US stock market will continue to be influenced by Federal Reserve policy, economic data, and the development of the tech industry. As rate cut expectations heat up, tech stocks may continue to lead the gains, but market divergence will intensify. Asian investors should seize the allocation opportunities brought about by this policy shift, while also paying attention to risk control to achieve long-term, stable returns.
