The Dow experienced a notable increase, supported by positive sentiment regarding the potential resolution of the US government shutdown within the week. The Dow increased by 559 points, representing a rise of 1.18%, concluding at an unprecedented level of 47,927.96. The broader S&P 500 experienced an increase of 0.21%. Meanwhile, the tech-heavy Nasdaq Composite experienced a decline of 0.25%. Equities experienced a predominantly upward trajectory on Tuesday following the Senate’s approval of a funding measure aimed at terminating the government shutdown on Monday. The legislation is now proceeding to the House for ratification prior to being forwarded to President Donald Trump for his signature. “With the Senate passing the stopgap funding bill, it is likely that the government shutdown will end by the end of the week,” stated Mohit Kumar.
On Tuesday, investors reallocated their portfolios away from technology stocks, directing their capital towards sectors such as health care, energy, and consumer staples. This contributed to an increase in the Dow, which has a lower exposure to the technology and artificial intelligence sectors. On Tuesday, 26 of the 30 companies within the blue-chip Dow experienced an increase in their closing values. The potential resolution of the government shutdown would consequently facilitate the release of crucial economic indicators regarding the labor market and inflation that had been postponed. The resumption of regularly scheduled data releases can enhance certainty and confidence among investors. Historically, in the 15 instances of government shutdowns since 1981, the S&P 500 has recorded an average increase of 2.7% in the month following the reopening of the government, as noted by Sam Stovall. José Torres, senior economist at Interactive Brokers, noted: “A finalized deal later this week is expected to drive stocks to stronger advances, as a significant economic risk is pushed to the rear-view mirror and replaced with improved prospects for the holiday season.”
On the tech front, Nvidia shares fell 2.96% on Tuesday following SoftBank’s disclosure of the sale of its entire stake in the company. Shares in CoreWeave, a cloud-computing company and notable player in the AI sector, declined by 16.31% following guidance that failed to meet investor expectations. Equities were concluding a session characterized by positive performance. The Nasdaq experienced a notable increase of 2.27% on Monday, marking its most significant daily gain since May, as investors capitalized on the opportunity to acquire technology stocks at lower prices. The bond market remained closed on Tuesday in observance of Veterans Day.
Fear and Greed index remained in the “fear” territory following a period of “extreme fear” observed in the previous week. Despite the Nasdaq’s pullback on Tuesday, a segment of investors anticipates that the rally will persist. “The Federal Reserve’s policy easing, robust corporate profits, and strong AI spending have been the key market drivers, in our view, and they should continue to support the equity rally,” stated Ulrike Hoffmann-Burchardi.