1. Rising Expectations of Fed Rate Cuts: A "Stimulus" for Market Sentiment
On October 1, 2026, Fed Chair Powell delivered a dovish signal at a congressional hearing, hinting at possible rate cuts in the coming months to address falling inflation and slowing economic growth. This statement immediately boosted market sentiment, with the three major US stock indices rising collectively: the Dow up 1.2%, the Nasdaq up 1.5%, and the S&P 500 up 1.3%. Data showed that on October 1, the Dow closed at 39,200 points, a new high since August 2026; the Nasdaq closed at 15,800 points, approaching its all-time high.
The backdrop for Fed rate cuts is that US August CPI rose 2.1% year-on-year, below the market expectation of 2.3%, and core CPI rose 2.0% year-on-year, below the 2.5% warning line for three consecutive months. Meanwhile, August non-farm payrolls increased by 185,000, below the expected 200,000, and the unemployment rate remained at 3.8%, indicating a cooling labor market. These data give the Fed more room to adjust monetary policy, with market expectations for a Q4 2026 rate cut rising from 50% to 70%.
1.1 Dual Signals from Inflation and Employment
Falling inflation data is a key factor for the Fed to consider rate cuts. Since 2024, the Fed has raised rates 11 times, increasing the federal funds rate from 0.25% to 5.25%-5.5%, effectively curbing inflation. However, in 2026, inflationary pressures continued to ease, with August CPI year-on-year growth falling sharply from 3.7% in the same period of 2025, and core inflation also approaching the 2% long-term target. The cooling labor market means the Fed does not need to worry about "overheating" risks, allowing it to gradually shift to an easing policy.
1.2 Market Pricing of Rate Cuts
The market has already priced in rate cuts. According to CME's FedWatch tool, the probability of a 25-basis-point rate cut in November 2026 is 65%, and another 25-basis-point cut in December is 55%. This expectation has pushed bond yields down, with the 10-year US Treasury yield falling from 4.2% in September to 3.8% in October, reducing corporate financing costs and benefiting growth stocks like tech stocks.
2. Tech Stock Rebound: Resonance of AI Hype and Earnings Expectations
Driven by expectations of Fed rate cuts and the AI hype, tech stocks became the leading sector in the US stock market in October. The Nasdaq 100 index rose 1.8%, with AI-related stocks like NVIDIA, Microsoft, and Google hitting all-time highs. NVIDIA's stock price rose 2.5%, with a market cap exceeding $3 trillion; Microsoft's stock price rose 1.8%, reaching a market cap of $3.2 trillion; Google's stock price rose 1.6%, with a market cap of $2.1 trillion.
2.1 Sustained Growth in AI Capital Expenditure
The rebound in tech stocks stems from sustained growth in AI capital expenditure. According to IDC data, global AI infrastructure spending will reach $150 billion in 2026, up 35% year-on-year, with chips, servers, and data centers being the main demands. As a leader in AI chips, NVIDIA's Q3 earnings report showed data center revenue grew 45% year-on-year, exceeding market expectations. Additionally, Microsoft's Azure cloud service revenue grew 22% year-on-year, with AI-related services contributing 30% of the growth.
2.2 Upward Revision of Earnings Expectations
Analysts generally raised earnings expectations for tech stocks. Goldman Sachs raised NVIDIA's 2026 EPS forecast from $12 to $14 and its target price from $500 to $600; Morgan Stanley raised Microsoft's 2026 EPS forecast from $12 to $13 and its target price from $380 to $420. These revisions reflect market optimism about the commercialization prospects of AI technology.
3. Vietnamese Capital Flow to US Stocks: An "Accelerator" for Cross-Border Investment
As the US stock market rebounded, the speed of Vietnamese capital flow to US stocks accelerated. According to data from the State Bank of Vietnam, in September 2026, Vietnamese investors' funds for purchasing US stocks through cross-border investment channels reached $1.5 billion, a new monthly high since 2026, up 20% from August. This trend is closely related to expectations of Fed rate cuts and the tech stock rebound.
3.1 Allocation Logic of Vietnamese Investors
The main logic for Vietnamese investors to allocate to US stocks includes: first, the advantage of global leaders, as US tech stocks like NVIDIA and Microsoft dominate the global market with stable profits; second, the need to diversify risks, as the Vietnamese stock market is small and volatile, and the US stock market, as the world's largest capital market, can diversify risks from a single market; third, currency gains, as the USD/VND exchange rate rose from 1:24,000 at the beginning of 2026 to 1:23,500 in October, allowing Vietnamese investors to gain from currency appreciation through investing in US stocks.
3.2 Impact of Vietnam's Foreign Exchange Policy
The State Bank of Vietnam recently relaxed cross-border investment restrictions, allowing individual investors to purchase US stocks through legal channels, which facilitates Vietnamese capital flow to US stocks. Additionally, Vietnam's foreign exchange reserves reached a record high of $120 billion in September 2026, providing sufficient funding support for cross-border investment. The State Bank of Vietnam also stated that it will maintain exchange rate stability and avoid large fluctuations, reducing currency risks for Vietnamese investors.
4. Investment Strategy: A "Balanced Offense and Defense" Plan for Vietnamese Investors
Facing the US stock market rebound, Vietnamese investors need to formulate a "balanced offense and defense" investment strategy, seizing opportunities in tech stocks while guarding against risks.
4.1 Focus on AI-Related Stocks
AI is the core theme of the current US stock market. Vietnamese investors can focus on leading stocks like NVIDIA, Microsoft, and Google. These stocks have strong and certain profit growth and benefit from sustained AI capital expenditure. Additionally, they can consider investing in AI ETFs, such as the iShares Robotics & Artificial Intelligence ETF (IRBO), to diversify single-stock risks.
4.2 Diversify Investments Across Sectors
Besides tech stocks, Vietnamese investors can also diversify investments into other sectors, such as healthcare, consumer, and energy. The healthcare sector benefits from an aging population, the consumer sector benefits from the US economic recovery, and the energy sector benefits from stable oil prices. Diversification can reduce risks from a single sector.
4.3 Pay Attention to Exchange Rate Fluctuations
Vietnamese investors need to pay attention to USD/VND exchange rate fluctuations. If the USD appreciates, returns from investing in US stocks will increase; if the VND appreciates, returns will decrease. Therefore, they can hedge currency risks through foreign exchange derivatives (such as forward contracts) or choose USD-denominated assets to avoid the impact of exchange rate fluctuations.
5. Risk Warning: Market Volatility and Policy Changes
Despite the optimistic performance of the US stock market, Vietnamese investors still need to be aware of the following risks:
- Uncertainty of Fed Policy: If inflation rebounds or the labor market improves, the Fed may delay rate cuts, leading to a market correction.
- Valuation Risk of Tech Stocks: Some tech stocks are already at historical high valuations. If earnings fall short of expectations, they may experience significant declines.
- Geopolitical Risk: Geopolitical events such as the Middle East situation and China-US relations may affect market sentiment, leading to increased volatility.
6. Conclusion
In October 2026, rising expectations of Fed rate cuts, the tech stock rebound, and accelerated Vietnamese capital flow to US stocks provide cross-border investment opportunities for Vietnamese investors. By focusing on AI-related stocks, diversifying investments, and hedging currency risks, Vietnamese investors can achieve stable returns in the US stock market. At the same time, they need to pay attention to market volatility and policy changes and formulate reasonable investment strategies.
