Optimism surrounding a potential deal in Washington, D.C., aimed at reopening the federal government contributed to a positive start on Wall Street this Wednesday. The Dow Jones Industrial Average, which has a lower exposure to technology stocks, continued to build on its strong performance during the government shutdown, closing at a record high. Over the last month, the Dow has gained more than 6%.
UnitedHealth Group led the gains within the Dow, rising by 3.6%. The company’s Chief Financial Officer, Wayne DeVeydt, reaffirmed confidence in the company’s trajectory, indicating that improvements in performance are expected as strategic initiatives take effect by 2027. Cisco Systems also saw a rise of 3.1% ahead of its upcoming earnings report post-market. Nvidia experienced a late surge of 0.3% following SoftBank’s decision to sell its entire $5.8 billion stake in the company, allowing CEO Masayoshi Son to focus on a significant $30 billion investment in OpenAI.
Among other prominent tech stocks, Microsoft increased by 0.5%, while Apple experienced a slight decline of 0.7%. Amazon.com saw the most significant drop within the group, finishing down 2.0%. Ultimately, the Dow closed up 0.7% at 48,254, marking its first finish above 48,000. The broader S&P 500 saw a modest increase of 0.06% to 6,850, yet the tech-heavy Nasdaq Composite dropped 0.3% to 23,406.
In the semiconductor sector, Advanced Micro Devices (AMD) surged by 9.0%. Analyst William Stein from Truist maintained a Buy rating for the company, setting a target price of $279 for the next year. Stein highlighted that AMD’s earnings per share could grow at a compound annual rate of approximately 45% through 2030, while the stock currently trades at a low multiple of its future earnings potential. AMD’s management revealed ambitions for 35% sales growth, supported by a significant rise in server accelerator sales.
Oklo, a company focused on nuclear energy solutions, rose by 6.7%. Wedbush analyst Dan Ives reiterated an Outperform rating with a 12-month target price of $150, noting that regulatory progress is facilitating quicker construction of nuclear facilities. Ives emphasized that as demand for energy rises due to advancements in AI, Oklo is primed to be a leading player in the nuclear sector.
In political news, the House of Representatives is expected to approve a bill aimed at ending the government shutdown, with a vote anticipated around 7:15 PM Eastern Time today. This compromise legislation would fund government operations through January 30, pending President Donald Trump’s signature.
Despite the uncertainties surrounding the shutdown, LPL Financial’s Chief Technical Strategist, Adam Turnquist, noted that stocks have seen gains since the shutdown’s commencement on October 1, with the S&P 500 rising 2%. Historically, resolving government shutdowns tends to bolster stock performance, with average returns of 1.2% and 2.9% observed one and three months post-crisis.
Michael Landsberg, Chief Investment Officer at Landsberg Bennett Private Wealth Management, attributed the stock market’s resilience to stronger-than-expected S&P earnings this year. However, he expressed caution, indicating that as more economic data becomes available, market participants will need to reassess their positions amid concerns over inflation and upcoming Federal Reserve meetings.
