Traders were busy on the floor of the New York Stock Exchange, and it seems the S&P 500 made a bit of a comeback on Wednesday, bouncing back from a decline that interrupted a solid seven-day winning streak. However, there’s some chatter about whether the artificial intelligence sector can maintain its momentum. Also, the U.S. government shutdown has entered its second week now.
The benchmark index saw a rise of 0.6%, bolstered by gains in sectors like information technology and utilities. These areas really seem to be pushing the market forward. The Nasdaq Composite climbed 0.9%, while the Dow Jones Industrial Average ticked up by 147 points, which is about 0.3%.
Nvidia had a positive day as well, with shares going up more than 1%. CEO Jensen Huang mentioned in a CNBC interview that the demand for computing has surged this year, particularly in the last six months. He also confirmed Nvidia’s support for Elon Musk’s AI startup, xAI, expressing enthusiasm about their funding ventures.
Investment strategist Ross Mayfield noted that even though we’ve seen some impressive AI capabilities emerging, there needs to be a steady demand for chips and the software that supports them. He finds some comfort in knowing the level of capital spending isn’t overly optimistic, which could signal steadiness ahead.
This news followed a rough day for Oracle, a key player in the AI chip scene, which saw its shares decline due to disappointing profits from its cloud business. Some reports indicated Oracle was even losing money on renting Nvidia’s chips, raising concerns about an AI bubble similar to what we witnessed in the late 1990s with the dot-com craze.
Many in the market are cautioning investors to reconsider their portfolios, but they’re also acknowledging that there’s still room for AI stocks to grow before they hit a ceiling.
Mayfield pointed out that back in the late ’90s, the Nasdaq would have corrections almost every year, suggesting that we might not be at the peak of enthusiasm for tech stocks just yet. There could well be a significant correction ahead before we see a real bull market.
On another note, the government shutdown entered its eighth day, with the Senate once again rejecting a stopgap funding bill. This marks the sixth failed attempt to advance a bill this session. While so far, this shutdown hasn’t heavily influenced stock prices, the longer it drags on, the riskier it becomes for the U.S. economy. President Trump recently mentioned that not all furloughed federal workers might get back pay, indicating more uncertainty ahead. Military members, too, might face disruptions with their scheduled paychecks coming up on October 15.
Lastly, Wall Street is eagerly awaiting the release of the latest Federal Reserve minutes, which could shed light on the central bank’s stance following a contentious September meeting.
