Wall Street Charges to New Highs
On Wednesday, U.S. stock indexes closed higher — the S&P 500 gained 0.58%, the Nasdaq 100 rose 1.19%, while the Dow Jones was unchanged. The spotlight once again fell on companies linked to artificial intelligence, as surging demand for chips and AI infrastructure drove the sector sharply higher and lifted the broader market.
Investor optimism stems from expectations that massive AI investments will soon translate into strong corporate profits. As a result, both the S&P 500 and Nasdaq hit new all-time highs, underscoring a firmly bullish sentiment.
Fed Policy and Government Shutdown Cloud the Outlook
Despite the rally, investors remain cautious about the Federal Reserve’s next move and the continuing U.S. government shutdown. The shutdown has delayed several key economic reports, including the August trade data and last week’s jobs report.
Bloomberg Economics estimates that over 640,000 federal employees have been furloughed, potentially pushing the unemployment rate to 4.7%. The White House warned that a prolonged shutdown could weaken consumer demand and slow economic growth.
Fed Outlook and Macroeconomic Trends
The minutes from the latest FOMC meeting revealed a mixed tone: most policymakers favor further rate cuts by year-end but are concerned about upside risks to inflation.
Markets are pricing in a 93% chance of a 25-basis-point rate cut at the upcoming October 28–29 meeting. Combined with the U.S. economy’s resilience, this expectation continues to support the stock rally.
Gold Soars to Record Highs as Investors Seek Safety
Amid political uncertainty and criticism of the Fed from President Trump, investors are flocking to safe-haven assets. Gold prices broke above $4,000 per ounce for the first time ever, marking a new record high. The People’s Bank of China increased its gold reserves for the 11th consecutive month.
Bitcoin has also benefited, attracting investors looking for alternative stores of value during periods of heightened volatility.
European and Asian Markets
European indexes ended moderately higher — the Euro Stoxx 50 gained 0.64%, while Japan’s Nikkei 225 fell 0.45%. Chinese markets remained closed for the Lunar New Year holiday.
Germany’s industrial production plunged 4.3% in August, its steepest drop in nearly 3.5 years. Still, the European Central Bank noted that inflation remains near its 2% target, and the Eurozone economy is slowly recovering.
Top Performers: AMD, Dell, and Datadog
The semiconductor sector led the rally. Advanced Micro Devices surged over 11%, Dell gained 9%, and Super Micro Computer and Marvell rose more than 6%. Nvidia, Micron, ON Semiconductor, and ARM also posted strong gains.
Datadog jumped 6% after Bernstein raised its price target to $170. Freeport-McMoRan rose 5% following an upgrade from Citigroup, while Constellation Energy gained 4% after a Seaport Global upgrade.
Defensive consumer stocks lagged as investors rotated into growth sectors. Tyson Foods and General Mills fell over 2%, while Fair Isaac Corp plunged 9% after rival Equifax announced a lower-cost competing credit scoring service.
The U.S. market continues to advance, powered by AI enthusiasm and hopes for further Fed easing. Yet, the government shutdown and signs of a global slowdown add a layer of uncertainty. Investors’ attention now turns to Fed Chair Jerome Powell’s Thursday remarks and Friday’s Michigan consumer sentiment report.
Subscribe to stay up to date with the latest events in the financial markets.
Telegram: @bigstakeinvest
Twitter: @BigStakeTrades
Telegram: @bigstakeinvest
Twitter: @BigStakeTrades