U.S. stocks experienced a notable uptick on Thursday, buoyed by excitement surrounding OpenAI and the tech sector, even as fears of a prolonged government shutdown lingered. The Nasdaq Composite, heavily weighted towards technology, surged by 0.6%, leading the overall market; the S&P 500 also posted gains, adding 0.3%. In contrast, the Dow Jones Industrial Average showed minimal movement, fluctuating near the flatline due to its lesser exposure to tech stocks.
On Wednesday, the S&P 500 had reached a significant milestone, closing above 6,700 for the first time in history. This momentum was amplified by a dip in ADP jobs numbers, which solidified investor expectations for interest rate cuts by the Federal Reserve later this year.
The optimism surrounding artificial intelligence (AI) was contagious, driving chip stocks to new heights globally. Nvidia, a leader in the sector, hit a record high, while other companies like AMD and SK Hynix also saw positive movements in their stock prices.
OpenAI’s valuation skyrocketed to $500 billion following a share sale for its employees, further energizing hopes for a tech market rally despite concerns regarding a potential AI bubble. Notably, OpenAI surpassed Elon Musk’s SpaceX to become the most valuable startup in the world.
In other news affecting the tech landscape, shares of Alibaba saw a significant rise after JPMorgan raised its price target by nearly 45%.
While stocks climbed, the market appeared to largely ignore the unfolding U.S. government shutdown, which is expected to last at least until the weekend. The Senate’s observance of Yom Kippur pushed any potential votes on funding to Friday, following a rejection of both Republican and Democratic proposals earlier in the week.
The implications of the shutdown could ripple through economic indicators, particularly impacting the release of the September jobs report, which is now likely to be delayed. This has led Wall Street to scrutinize private employment data, as the Federal Reserve is anticipated to closely monitor labor market conditions ahead of their next meeting.
Challenger, Gray & Christmas released figures indicating a significant drop in hiring plans, marking the lowest levels since 2009, although layoffs experienced a decline. This reinforced the narrative of a “low hire, low fire” job market, a point further echoed by growing anticipation of a rate cut by the Fed.
Tesla reported exceptionally strong third-quarter deliveries, initially lifting its stock by 3% in premarket trading. However, the excitement subsided, leading to a slight dip of 1% by mid-morning.
As the session progressed, Treasury yields remained steady, with the 10-year yield inching up by a basis point to 4.11%. The current climate has led Treasury Secretary Scott Bessent to warn that an extended government shutdown could dampen U.S. economic growth, suggesting risks to GDP and overall job market stability.
In the corporate world, Fair Isaac Corporation (FICO) saw its stock surge nearly 19% after announcing it would offer FICO scores directly to mortgage lenders, challenging traditional credit bureaus and lowering associated fees. Conversely, shares of Equifax and other credit bureaus dropped in response.
Warren Buffett’s Berkshire Hathaway made headlines with a significant $9.7 billion acquisition of Occidental Petroleum’s chemical division, marking one of the largest deals in recent years for the investment giant.
Meanwhile, Amazon faces mounting competition in its cloud computing division, impacting its stock appeal, as rivals like Microsoft and Oracle intensify their market presence.
Fermi’s REIT, founded by former U.S. Energy Secretary Rick Perry, saw shares rise substantially following a successful IPO that raised $683 million, reflecting robust interest from investors.
Investors remained keenly aware of global trends, as the AI sector propelled chip manufacturers to unprecedented valuations, underscoring the ongoing bullish sentiment surrounding technology and innovation.
