The opinions expressed here are those of the author, a columnist for Reuters

By Mike Dolan

Oct 28 (Reuters) - What matters in U.S. and global markets today

By Mike Dolan, Editor-At-Large, Finance and Markets

Bulled up by another wave of AI deal-making and earnings excitement and with interest rates about to fall again, Wall Street now faces two days of critical monetary policy, earnings and global trade events that will test week's optimism.

Despite months of fretting about possible bubbles in the AI gold rush, the world's most valuable stock, AI chip giant Nvidia, is poised to top $5 trillion in market value for the first time at the market open on Wednesday - just three months after it crossed the $4 trillion mark. Microsoft and Apple are now above or flirting with $4 trillion market caps too.

The top four U.S. megacaps now have a market value in excess of the entire European STOXX 600 index, which is just under $14 trillion.

Nvidia shares jumped 5% on Tuesday and another 2.8% in premarket trade today after CEO Jensen Huang announced $500 billion in AI chip orders and plans to build seven supercomputers for the U.S. government.

And with optimism rising this week around some trade war detente at Thursday's crucial summit between President Donald Trump and China's President Xi Jinping in South Korea, Trump praised Nvidia's flagship Blackwell model as a "super-duper chip" and said he might speak to Xi about it following on-off curbs on tech exports this year.

Meantime, Microsoft, Meta and Alphabet report earnings updates after Wednesday's market close and Apple and Amazon are out Thursday. Microsoft shares jumped 2% on Tuesday after it and OpenAI announced a restructuring that frees the ChatGPT maker to move away from nonprofit roots and go public - allowing it to finance CEO Sam Altman's ambitious plans to develop data centers and cutting-edge technology.

With AI bullishness in overdrive, the potential downside of the technology was also in evidence this week - with sweeping job cuts announced by the likes of Amazon and UPS. With official economic data still absent due to the government shutdown, a preliminary estimate of an ADP National Employment Report showed the U.S. economy added an average of 14,250 jobs in the four weeks ending October 11.

And it is softness in the labor market that's likely to keep the Federal Reserve cutting interest rates later on Wednesday, this time by another quarter point to below 4% for the first time in three years. Investors will also watch closely for an announcement on the end of its balance sheet rundown, so-called "quantitative tightening".

Despite another heavy week of new debt sales, Treasury yields were subdued ahead of the decision - with the MOVE gauge of bond market volatility falling to its lowest in four years this week. The dollar was marginally firmer.

And with AI driving the megacaps, Wall Street index futures were up again ahead of today's bell after hitting record closing highs on Tuesday.

Elsewhere, the Bank of Canada is also expected to cut its interest rates today by a quarter point. Tomorrow's decisions from the European Central Bank and Bank of Japan are expected to leave policy unchanged there.

In the thick of the European earnings season, Deutsche Bank rose 1% after its positive earnings - but UBS dropped 1% despite a forecast-beating 74% surge in net profit.

In today's column, I discuss the latest collapse in U.S. Treasury bond volatility and how it flies in the face of crisis warnings throughout the year.

Today's Market Minute

• Donald Trump and South Korean President Lee Jae Myung finalised details of their fraught trade deal at a summit in South Korea on Wednesday, and the U.S. president also sounded an optimistic note about a looming summit with China's Xi Jinping.

• Nvidia (NVDA.O), opens new tab was set to make history on Wednesday by becoming the first company to notch $5 trillion market value, extending a powerful rally that has cemented its place at the center of the artificial intelligence boom.

• Saudi Arabia is preparing to shift its $925 billion sovereign wealth fund away from a focus on real estate gigaprojects that have dominated its development goals for the last decade, a source with direct knowledge of the plans told Reuters.

• With Wall Street scaling fresh peaks and five of the " Magnificent Seven " U.S. tech giants reporting earnings this week, investors' focus is once again zeroing in on record-high stock market concentration and the risks associated with it. But, writes ROI markets columnist Jamie McGeever, this concern may be overblown.

• China's imports of iron ore are on track for another robust month in October, following on from September's record arrivals, with the strength standing in stark contrast to weak steel output. Read the latest from ROI Asia commodities columnist Clyde Russell.

Chart of the day

Nvidia was set to make history on Wednesday by becoming the first company to notch $5 trillion market value, extending a powerful rally that has cemented its place at the center of the artificial intelligence boom. President Donald Trump said he will speak to Chinese President Xi Jinping about Nvidia's state-of-the-art Blackwell AI chip at their expected meeting on Thursday. Sales of the U.S. firm's high-end AI chips to China, which accounted for 13% of its revenue in the past financial year, have been a key sticking point in protracted trade talks between the world's two largest economies this year.

Today's events to watch

* U.S. Federal Reserve's Federal Open Market Committee policy decision (2:00 PM EDT), with press conference from Fed Chair Jerome Powell (2:30 PM EDT)

* Bank of Canada interest rate decision (9:45 AM EDT)

* U.S. corporate earnings: Microsoft, Meta, Alphabet, eBay, MGM, Boeing, Caterpillar, Equinix, Ventas, Verizon, Kraft Heinz, Everest, Starbucks, CVS, Centene, Align, GE Healthcare, Tyler, Fiserv, Masco, Cognizant, AvalonBay, ADP, Otis, Chipotle, DaVita, Garmin, Rollins, Dayforce, ServiceNow, NiSource, KLA, Smurfit Westrock, American Water Works, American Electric Power, Phillips 66, IDEX, Fortive, TE, Verisk, Generac, CH Robinson, Extra Space, Public Storage, Essex Property, Entergy, UDR

* U.S. Treasury sells 2-year floating rate notes

* U.S. President Donald Trump visits South Korea

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Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.

(By Mike Dolan; Editing by Allison Williams)

((mike.dolan@thomsonreuters.com; +44 207 542 8488; Reuters Messaging: mike.dolan.reuters.com@thomsonreuters.net/))