Technology Stocks Continue to Climb Amid Government Shutdown
New York (AP) – Technology stocks are on the rise, even as Wall Street navigates a US government shutdown. The S&P 500 gained 0.1%, continuing its upward trend. The Dow Jones Industrial Average added 117 points (0.3%) in less than an hour of trading, while the Nasdaq Composite increased by 0.5%, working its way toward new records.
Usually, Thursdays in Wall Street are influenced by the latest weekly count of unemployment benefit applications. However, the shutdown in Washington has delayed this week’s unemployment claims report, pushing back the monthly job market numbers that would typically be released on Friday. This uncertainty leaves many on Wall Street concerned about predictions that investors rely on to gauge the job market’s health. While the Federal Reserve is cutting interest rates, some believe it might not stave off a recession.
“The Fed is highly dependent on available data, and the lack of this data from public sources could pose problems,” expressed Brian Rehling, head of global bond strategy at Wells Fargo Investment Institute.
Interestingly, despite the data lag, the US stock market seems to be managing well. The impact of a government shutdown has historically not been severe on the economy or the stock market, and I suppose this situation might be similar, even if President Donald Trump has indicated potential large-scale federal layoffs.
This set the stage for corporate announcements to play a significant role in Thursday’s trading.
Shares in the chip and AI sectors surged after OpenAI revealed its partnership with South Korean firms in a $500 billion project aimed at enhancing AI infrastructure. Samsung Electronics rose by 3.5% in Seoul, while SK Hynix saw a remarkable jump of 9.9%.
The news created a ripple effect globally. In the US, Advanced Micro Devices rose by 3.5%, and Broadcom climbed by 1.8%. Nvidia’s 1% increase was particularly significant in driving the S&P 500 higher. The excitement around AI and the prospect of substantial spending in this area seem to be key factors behind the current bullish market trend. However, there is rising concern about a possible bubble, given the sheer amount of capital flowing into AI stocks.
Meanwhile, Occidental’s stock fell by 7% following an agreement to sell its chemical division, Oxichem, to Berkshire Hathaway for $9.7 billion. This could mark yet another high-profile acquisition for Berkshire, under the leadership of renowned investor Warren Buffett.
In contrast, Fair Isaac’s stock soared by 18.6%, marking its best day in nearly three years after it introduced a program allowing mortgage lenders to access FICO credit scores, which hurt big credit bureaus like TransUnion, Equifax, and Experian. TransUnion’s shares dropped by 10.1%, while Equifax declined by 8.4%. U.K.-based Experian fell by 4.2% in London.
Across the pond, London’s FTSE 100 dipped by 0.2%, yet the European and Asian markets showed more resilience. In South Korea, the Cospi index jumped by 2.7%, riding on the significant gains from Samsung and SK Hynix.
In the bond market, the yield on the 10-year Treasury dropped to 4.08%, down from 4.12% on Wednesday.
