Tech Stocks Lead US Market Gains Amid Uncertainty
In a week marked by uncertainty, US stocks closed higher on Wednesday, with technology shares driving the market’s performance. As the government shutdown continued, investors turned to the Federal Reserve’s recent policy meeting minutes for insights into the future of interest rates.
The Nasdaq Composite, heavily weighted with technology stocks, saw the most significant percentage gain. This was largely fueled by artificial intelligence (AI)-related megacaps that have been leading market gains this year. The S&P 500 and the Nasdaq both reached all-time closing highs, while the Dow Jones Industrial Average ended the day nearly flat.
Chip stocks were among the top performers, while energy, consumer staples, and homebuilders lagged. A report from the Mortgage Bankers Association revealed a 4.7% drop in home loan demand last week, despite lower interest rates. This suggests that the housing market remains sluggish amid ongoing economic challenges.
Bill Merz, head of Capital Market Research at US Bank Wealth Management, noted that the market is still focused on aggressive growth, particularly in the AI space. “Anything attached to AI is garnering a significant amount of attention,” he said. He added that the theme of continuous deal announcements in the AI sector has been a key driver of investor sentiment.
Amid growing concerns about US and geopolitical uncertainties, gold prices surged past the $4,000 per ounce threshold. Investors are turning to gold as a safe-haven asset to hedge against rising risks. Merz pointed out that in recent years, stocks and safe havens have often worked together. “Fundamentals are supporting higher than normal valuations, and deficit spending must be financed by additional debt,” he explained.
The US government shutdown entered its eighth day, and a congressional stalemate suggested that official economic data would remain scarce for the immediate future. This left market participants with little to guide them until the third-quarter earnings season begins next week.
With no new data to rely on, investors are closely watching the upcoming earnings season and the minutes from the September FOMC meeting for clues about the central bank’s intentions regarding potential rate cuts. The minutes revealed a divided committee, with policymakers concerned about labor market risks but still cautious about inflation. While many believed it would be appropriate to ease policy further this year, the timing and pace of any moves remained unclear.
Zachary Hill, head of portfolio management at Horizon Investments, highlighted that the Fed is facing a challenging situation without public sector economic data. “The shutdown continues to make policymakers’ job even tougher,” he said.
Financial markets are currently pricing in a 92.5% probability that the Fed will cut the Fed funds target rate by 25 basis points at its meeting on October 29. This expectation is influencing investor behavior and market dynamics.
Key Market Movements and Stock Performances
The Dow Jones Industrial Average closed slightly lower, gaining just 1.20 points, or 0.00%, to 46,601.78. The S&P 500 rose 39.13 points, or 0.58%, to 6,753.72, while the Nasdaq Composite climbed 255.02 points, or 1.12%, to 23,043.38.
Among the 11 major sectors of the S&P 500, technology shares led the gains, while energy stocks experienced the steepest decline.
Several individual stocks stood out during the session. Datadog rose 6.2% after Bernstein raised its price target on the cloud security firm. In contrast, Intercontinental Exchange fell 2.2% following a downgrade from Barclays. Fair Isaac Corp dropped 9.8% after Equifax announced plans to offer cheaper mortgage credit scores.
Gold prices helped lift shares of gold miners Newmont and Gold Fields, which gained 1.7% and 3.7%, respectively. Dell surged 9.1% after multiple brokerages raised their price targets. Freeport-McMoRan advanced 5.3% following Citigroup’s upgrade to “buy” from “neutral.”
Joby Aviation declined 8.1% after announcing a $514 million share sale at a 10.9% discount to its last closing price. AMD jumped 11.4%, extending its three-day rally, with shares up over 43% this week.
Market Activity and Trading Volumes
On the New York Stock Exchange, advancing issues outnumbered decliners by a 1.74-to-1 ratio, with 469 new highs and 70 new lows. On the Nasdaq, 3,007 stocks rose and 1,659 fell, with advancing issues outpacing decliners by a 1.81-to-1 ratio.
The S&P 500 recorded 35 new 52-week highs and 6 new lows, while the Nasdaq Composite saw 129 new highs and 62 new lows. Total trading volume on US exchanges reached 20.70 billion shares, compared to an average of 19.63 billion shares over the last 20 trading days.
