U.S. Equities are trending upward, nearing a new peak. The S&P 500 saw a gain of 0.2% in early trading Wednesday, approaching the historic high it achieved a few weeks prior. The Dow Jones Industrial Average increased by 127 points, following its own record-setting performance the previous day, while the Nasdaq composite advanced by 0.3%. Tech shares experienced a resurgence. Advanced Micro Devices saw an increase after its chief executive officer projected annual compounded revenue growth exceeding 35% over the upcoming three to five years. Nvidia, a leading provider of chips essential for artificial intelligence, also experienced an uptick.
TL;DR
- U.S. stocks trended upward, nearing all-time highs despite government shutdown and tech sector volatility.
- Advanced Micro Devices and Nvidia shares saw gains amid optimistic revenue growth projections.
- The government shutdown impacted economic data flow, potentially influencing the Federal Reserve's interest rate decisions.
- Concerns linger about AI stock valuations potentially mirroring the 2000 dot-com bubble.
THIS IS A BREAKING NEWS UPDATE. AP’s earlier story follows below.
U.S. Stock markets are poised for a higher opening on Wednesday, as the government shutdown seems to be nearing its end, and tech shares are showing signs of recovery following volatile trading earlier in the week.
S&P 500 futures saw a gain of 0.4%, and Dow Jones Industrial Average futures climbed 0.3%. The Nasdaq index, which is heavily weighted toward technology, also experienced an increase in futures, up by 0.6%.
The longest federal government shutdown in U.S. History could be over as soon as Wednesday, but not without having tripped up an economy already under stress.
More than a million federal workers haven’t been paid since Oct. 1. Thousands of flights have been canceled, a trend that’s expected to continue this week even if the U.S. Government re-opens. Many food aid recipients have seen their benefits interrupted.
The Congressional Budget Office estimated indicated that a six-week government shutdown would decrease this year's fourth-quarter growth by approximately 1.5 percentage points.
The government shutdown cut off the flow of economic data unemployment, inflation, and retail spending figures, which the Federal Reserve relies on to assess the economy's condition. Consequently, the Fed might not implement a third interest rate reduction during its December session, an action that was largely anticipated prior to the shutdown.
Federal Reserve Chair Jerome Powell indicated that the committee responsible for setting interest rates is significantly split on the prospect of lowering the benchmark rate, a situation partly attributable to the economy's notably uncertain condition.
Following recent sell-offs, the tech industry seems to have stabilized, amid rising worries that stock valuations have become excessive. Nvidia, which has seen a 44% increase year-to-date, has experienced a 5% decline this week.
CoreWeave, a company closely associated with Nvidia, saw a 17% drop on Tuesday. This decline occurred after its annual outlook failed to meet the high expectations of AI investors accustomed to rapid expansion. The firm debuted on the stock market in March. Its stock experienced a 3% increase in early trading on Wednesday.
Shares of Advanced Micro Devices, which have seen a twofold increase this year, climbed 5% in overnight trading following the chip manufacturer's projection of substantial revenue expansion in its data center operations, driven by the demand for AI.
A big question has been whether investors will push the craze for AI stocks further.
The U.S. Market's record-breaking performance is largely due to their remarkable expansion, even with a slowing job market and high inflation. However, their prices have shot so high, which critics argue they're reminiscent of the 2000 dot-com bubble,, eventually collapsed, causing the S&P 500 to plummet by almost 50%.
Elsewhere, in Europe at midday, France’s CAC 40 Germany’s DAX each surged 1.2%. Britain’s FTSE 100 was unchanged.
In Asian trading, Japan’s benchmark Nikkei 225 added 0.4% to finish at 51,063.31.
Hong Kong's Hang Seng index climbed 0.9% to 26,922.73, and the Shanghai Composite saw a slight decrease of under 0.1% at 4,000.14.
Australia’s S&P/ASX 200 shed 0.2% to 8,799.50. South Korea’s Kospi added 1.1% to 4,150.39.
Benchmark U.S. Crude oil saw a decrease of 65 cents, settling at $60.39 per barrel. Brent crude, the global benchmark, dropped 66 cents, closing at $64.50 per barrel.