Nvidia Exposes a Stock Market Problem. How the Fed Can Solve It.

Nvidia CEO Jensen Huang (I-HWA CHENG/AFP via Getty Images)

If this stock market were a house, it would look great from the outside but its dimensions would raise architectural concerns.

The S&P 500 hit fresh records to start the week, helped by Nvidia’s latest blockbuster deal with OpenAI. Behind the scenes, performance is more mixed.

Fewer than one in 10 stocks are at 12-month highs. And while the S&P 500 with its outsize tech weighting has jumped 13.8% this year, the equal-weighted version of the index is up only 7.7%.

It’s a familiar story and repeat of 2023 and 2024, when tech heavyweights pushed the market higher against a backdrop of rocky Federal Reserve policy.

That’s not necessarily a problem, unless a shock to the tech sector causes it to unwind. Valuations also look stretched. But Nvidia and Co.’s stardom mostly masks wider weakness.

The labor market is in the doldrums and home sales have at points this year been the slowest since 2009. Add in continued signs of inflation and it’s easy to see why the Fed’s job is so hard right now.

As the Minneapolis Fed’s Neal Kashkari said last week, it looks like some parts of the market don’t need interest-rate cuts, while others need them badly.

Outside tech, investors are rightly concerned about the Fed’s pathway on rates. Last week’s quarter-point cut was welcome, but expectations for borrowing costs to fall further keep shifting amid inflation worries.

A mass of Fed speakers on Monday reiterated inflation concerns and a speech from Fed Chair Jerome Powell on Tuesday is likely to do the same. Inflation data due Friday will be critical.

Just as a house needs strong foundations to stay standing, the stock market needs rate cuts—or the rally could come crashing down.

—Jack Denton

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Nvidia Strikes Another Deal, Investing $100 Billion in OpenAI

Nvidia and OpenAI are working together to advance artificial intelligence, unveiling plans for a massive buildout of data centers. The agreement is a bet that AI models continue to improve and drive continued and accelerated investment toward a future that is increasingly thirsty for computing power.

• Nvidia plans to invest up to $100 billion in OpenAI. The partnership will deploy at least 10 gigawatts of Nvidia AI systems to train and run OpenAI’s next-generation AI models. The first phase is planned to come online during the second half of 2026.
• The arrangement will be using Nvidia’s upcoming Vera Rubin advanced AI platform. Nvidia’s investment in OpenAI will be done as each gigawatt is deployed. OpenAI said Nvidia will be the “preferred” compute and networking partner for its AI factory growth plans.
• OpenAI CEO Sam Altman told CNBC that only Nvidia had the capability to enable an AI infrastructure buildout at this type of enormous scale and speed. Nvidia CEO Jensen Huang said it’s the next leap forward for the two companies, which have pushed each other for the past decade.
• Broadcom earlier announced a $10 billion order for AI chips from a new customer, reported to be OpenAI by The Wall Street Journal. Some analysts have wondered if Broadcom would attain a much larger share of OpenAI’s future AI chip orders but the Nvidia deal may lower those chances.

What’s Next: Nvidia is also investing $5 billion into chip rival Intel, where it will design custom processing chips that can be integrated into its own chips and data center equipment and personal computers. And it’s making $2.5 billion of investments in AI projects in the U.K.

— Tae Kim and Liz Moyer

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Miran Believes Fed Rate Is Way Too High, Explains Dissent

Federal Reserve governor Stephen Miran broke from his colleagues at last week’s policy meeting because he believes the central bank has set interest rates about two percentage points too high, taking into account structural shifts in the economy. He won’t accept consensus decisions he doesn’t believe in.

• Miran, the lone dissenter at last week’s meeting, told the Economic Club of New York the appropriate benchmark rate should be in the low- to mid-2% range, well below the current level of 4%-4.25%. He warned that current policy risks unnecessary layoffs and higher unemployment.
• Changes in immigration, tariffs, tax law, and regulation have pushed down the economy’s neutral rate of interest, the level at which Fed policy is neither stimulating nor slowing growth, he said, adding that officials are underestimating how restrictive policy currently is because the Fed hasn’t fully accounted for those shifts.
• During a question-and-answer session, Miran shared plans to keep pressing his case for steeper rate cuts, even if he remains in the minority. “I’m not going to vote for something I don’t believe in, just for the sake of creating an illusion of consensus where there is none.”
• Miran’s comments contrast with Atlanta Fed President Raphael Bostic, who told The Wall Street Journal that inflation concerns make him hesitant about declaring his support for another rate cut in October. He has only projected one rate cut for all of 2025.

What’s Next: Fed Chair Jerome Powell speaks on the U.S. economy during an event today hosted by the Greater Providence Chamber of Commerce. He’s scheduled to deliver prepared remarks at 12:35 p.m. Eastern time during a luncheon, with a Q&A to follow.

— Nicole Goodkind

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Disney Restores Jimmy Kimmel’s Show to ABC After Controversy

In a fairly quick about-face, Walt Disney announced it would restore comedian Jimmy Kimmel’s late night show to ABC starting this evening after suspending it last week under pressure from the Trump administration and affiliate owners Sinclair and Nexstar over comments Kimmel made regarding Charlie Kirk.

• Disney, announcing the come back on Monday, said it suspended the show to avoid further inflaming a tense situation but has decided to return the show after several days of discussion with Kimmel. But Sinclair and Nexstar, which together own dozens of ABC affiliates, could still decide to pre-empt the show.
• Nexstar owns or operates around 30 local ABC stations, while Sinclair runs 38. For Disney, the decision shaped up after a meeting between Kimmel and top executives at the entertainment company, The Wall Street Journal reported, which added there’s no comment on whether Kimmel will publicly address the matter.
• Disney faced pushback for suspending Kimmel after Federal Communications Commission Chair Brendan Carr threatened to step in if Disney-owned ABC didn’t take action. And President Trump suggested the administration could revoke broadcast licenses of television networks that are critical of him.
• The FCC, Nexstar, and Sinclair didn’t reply to Barron’s requests for comment. Hundreds of actors and other celebrities are signatories of a letter sponsored by the American Civil Liberties Union calling Kimmel’s suspension a “dark moment” for freedom of speech.

What’s Next: Anna Gomez, the sole Democrat FCC commissioner, said in a statement that she was “glad to see” Disney find courage in the face of “clear government intimidation.” She said the FCC, which clears mergers of media companies, must combat efforts to stifle free expression.

— Anita Hamilton and Liz Moyer

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Trump Links Autism to Tylenol Use During Pregnancy

President Donald Trump’s health policies are taking shape, and they include a warning about the use of Tylenol during pregnancy, which he has linked with autism in children, and a separate warning about the child vaccine schedule. Tylenol maker Kenvue said there isn’t a causal link between the drug and autism.

• Acetaminophen, Tylenol’s active ingredient, is one of the few pain and fever medications recommended for pregnant women. But Trump, flanked by Health Secretary Robert F. Kennedy Jr., Medicare Administrator Mehmet Oz, and others, warned them not to take it.
• Kenvue told Barron’s that it was “deeply concerned” with the risks this poses for expecting mothers. And Dr. Steven J. Fleischman, president of the American College of Obstetricians and Gynecologists, said it wasn’t backed by the full body of scientific evidence and dangerously simplifies causes of neurologic challenges in children.
• Kenvue, spun out of Johnson & Johnson in 2023, has faced numerous lawsuits claiming that prenatal exposure to Tylenol was associated with increased risk of autism and attention deficit hyperactivity disorder in children. A federal judge twice ruled in Kenvue’s favor in combined lawsuits, citing issues with the plaintiffs’ methodologies.
• Navann Ty, lead analyst for U.S. healthcare at BNP Paribas, told Barron’s that “Proving the causation will be very difficult, because the plaintiffs have already tried” in previous lawsuits. She doesn’t expect Monday’s announcement to reopen previous litigation or to affect Tylenol sales.

What’s Next: Trump’s warning about the childhood vaccine schedule focused on the number of vaccines given at a time, suggesting parents spread them out instead. More study into whether vaccines cause autism—scientists have pointed to several studies showing no link—is coming, Kennedy said.

— Nate Wolf and Janet H. Cho

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—Newsletter edited by Liz Moyer, Patrick O’Donnell, Callum Keown