US stocks experienced a robust increase on Thursday, buoyed by ongoing enthusiasm surrounding artificial intelligence (AI) investments and a notable surge in the valuation of OpenAI. This growth occurred alongside cautious investor sentiment regarding a potential prolonged US government shutdown.
The tech-heavy Nasdaq Composite rose by 0.4%, while the S&P 500 and Dow Jones Industrial Average saw gains of 0.2% and 0.3%, respectively. The market momentum followed the S&P 500’s historic close above 6,700 the previous day. A positive trend in the AI sector particularly uplifted semiconductor stocks globally, with shares in Nvidia reaching an all-time high. Additionally, AMD and SK Hynix also posted increases.
OpenAI’s valuation skyrocketed to $500 billion following an employee share sale, marking a significant achievement as it dethroned Elon Musk’s SpaceX as the world’s most valuable startup. This surge in value has amplified bullish sentiments in the tech sector, despite growing concerns about a speculative bubble in the AI market.
Despite the looming government shutdown, which is expected to extend at least until the end of the week, stock market reactions remained predominantly optimistic. Former President Trump intensified his rhetoric concerning the shutdown, threatening to discharge “thousands” of federal employees and to withdraw substantial funding from states governed by Democrats. Meanwhile, Trump is scheduled to meet with the Office of Management and Budget Director Russ Vought to strategize on which government agencies might face cuts.
The release of the September jobs report scheduled for Friday is anticipated to be postponed due to the shutdown, leading Wall Street traders to redirect their focus during this federal data pause. Concerns about the labor market have become more pronounced, as highlighted by private data from Challenger, Gray & Christmas, which revealed that hiring plans have plummeted to their lowest levels since 2009, despite a decline in layoffs. This data indicates a trend of “low hire, low fire” in the labor market, raising expectations for possible rate cuts at the Federal Reserve’s upcoming meeting.
In additional corporate news, Tesla shares faced pressure despite announcing record sales figures for the third quarter. Investors appeared to be more concerned about the company’s future performance, particularly in light of expiring federal electric vehicle tax credits.
In commodities, Bitcoin rose by 2% as investors speculated about a seasonal increase dubbed “Uptober,” a historically favorable time for cryptocurrencies. Conversely, gold prices took a pause after an impressive rally earlier in the year, although industry experts forecast a potential surge to $4,000 per ounce in the coming months.
Oil prices dropped by around 2%, marking four consecutive days of declines amid concerns over oversupply. Current futures hover near $60 per barrel, with OPEC+ considering a plan to bolster output by up to 500,000 barrels per day in November.
Meanwhile, mortgage rates rose for the second straight week, impacting refinancing demand. In the labor market, reports indicated that US hiring intentions have sunk to their lowest level since the Great Recession.
Fermi, a real estate investment trust co-founded by former US Energy Secretary Rick Perry, saw its stock oscillate following a significant initial trading day, as the company aims to develop data centers to support AI-driven demands.
OpenAI’s valuation continued to catalyze stock gains across the semiconductor sector, driving a rally in Nvidia, AMD, and Broadcom stocks, as investors speculated on the increasing need for AI chip production.
As uncertainty builds around the government shutdown and its economic implications, industry leaders continue to express cautious optimism regarding the overall market, particularly in sectors supported by advancements in AI and technology.
