UPDATE: Wall Street’s main indexes surged today as investors reacted to a likely end to the longest US government shutdown in history. The Dow Jones Industrial Average hit a record high, rising by 361.85 points or 0.77 percent, reaching 48,297.95 in early trading.
The positive momentum is fueled by an optimistic earnings outlook from Advanced Micro Devices (AMD), which announced it anticipates annual data center chip revenue of $100 billion within the next five years. AMD’s stock jumped 8.2 percent following this announcement, reigniting enthusiasm for AI technology.
Despite initial pressure on US stocks, triggered by news that Japanese investor SoftBank Group sold its stake in Nvidia, the broader semiconductor index recovered, gaining 1.8 percent. Financials also contributed significantly, with Goldman Sachs leading the Dow’s advance, up 2.2 percent. The S&P 500 and Nasdaq Composite followed suit, with the S&P up 16.96 points (+0.26 percent) to 6,864.31, while the Nasdaq saw a modest gain of 7.81 points (+0.03 percent) to 23,476.11.
Members of the House of Representatives are returning to Washington D.C. for a critical vote scheduled for this evening. This vote is expected to reopen the government and restore essential services, including air travel and food subsidies.
“There is an even bigger mountain ahead of us and that is the resumption of all of the economic data,”
stated Michael Landsberg, CIO at Landsberg Bennett Private Wealth Management.
The 42-day shutdown has significantly impacted the economy. With no government data available, both the Federal Reserve and traders have relied on private indicators to assess economic conditions. Recent data revealed a continued weakness in the labor market, with private employers losing an average of 11,250 jobs per week for the four weeks ending October 25.
Market watchers are currently pricing in a 63 percent probability of a 25-basis-point reduction at the Federal Reserve’s monetary policy meeting in December, according to CME Group’s FedWatch tool. Several Fed policymakers, including Governor Christopher Waller, are scheduled to speak today, providing further insight into the economic landscape.
As the third-quarter earnings season winds down, 82 percent of the 446 companies in the S&P 500 have reported profits exceeding analyst expectations, a stark contrast to the long-term average of 67 percent. The upcoming earnings report from AI leader Nvidia next week will be closely scrutinized as it could either validate or challenge current market optimism.
Other notable stock movements included a 2.9 percent increase in shares of IBM following its announcement of new quantum computing chips. Advancing issues outnumbered decliners on the NYSE by a 1.99-to-1 ratio and by 1.89-to-1 ratio on the Nasdaq.
Stay tuned for real-time updates as the situation develops and the government vote unfolds this evening.
