Investors stay focused on buying Quality and Nvidia despite bets for US rate cuts being shaved down

What you need to know in two sentences: Markets fell from record all-time highs on hotter-than-expected US inflation, with many now debating if the Fed will pause rate cuts here. But we are seeing global investors and investors at moomoo alike, buy into Quality stocks and ETFs, with bets on for Nvidia $NVIDIA (NVDA.US)$ to hit a record of $150. The most traded stock at moomoo again this week was Nvidia with China's X3 leveraged ETF, $Direxion Daily FTSE China Bull 3X Shares ETF (YINN.US)$ also seeing a lot of activity.

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More detail... It’s a jagged pill for markets - Inflation is sticky; annual inflation rose by 0.1% more than expected, with yearly inflation rising to 3.3%YoY. So now expectations for Fed rate cuts have been shaved back with a cutthroat razor. The market threw away the idea of a super-sized US rate cut in November. And now markets are not even sure if the US central bank, the Fed will cut by 0.25% in November. Or even cut in December, January and March.

So when is inflation hot. But not too hot for some to handle. And could pick up again  - as oil prices are 16% in the month. What do you need to consider when investing and trading?

1 - Well this scenarios means we could see the US dollar rise and US bond yields  move up, like we saw overnight. This caused the small cap index, the Russel 2000 Index $Russell 2000 (LIST20783.US)$ $iShares Russell 2000 ETF (IWM.US)$ to fall, its now down 5% from its record high as small companies in this index generally carry higher debt in comparison to earnings they make.

2 - But we’ve seen buying of quality and large companies continue. The QUAL ETF   $iShares MSCI USA Quality Factor ETF (QUAL.US)$ trade in record all time high territory. Nvidia $NVIDIA (NVDA.US)$ is its biggest position in the QUAL ETF, followed by Apple $Apple International (2788.JP)$ and Microsoft $Microsoft (MSFT.US)$.

3 - Speaking of Nvidia $NVIDIA (NVDA.US)$ , its stock is chasing toward it record high of $140.76 after rising almost 2% overnight to $134.81, its highest level since July. It seems many are underestimated the power of Nvidia. But if you were to look the options market, which is used by sophisticated traders, it’s telling us that market is very bullish on Nvidia, and there are two times as many calls. Or bets for it to rise, than there are puts, for it to fall. And option traders are also betting the world’s 2nd biggest company will soon hit $150.

4 - As for other stocks to watch Tesla $Tesla (TSLA.US)$ is hot on the lips of traders ahead of its Robotaxi event.

5 - And focus is on benefactors from the lithium price seeing its first monthly jump since May. For more on lithium click here.