[New York Stock Exchange] AI Rally Resumes... Broad Rebound Despite Shutdown Risk

AI Stocks Rebound After Last Week's Slump
Trump and Democrats to Hold Key Talks Amid U.S. Government Shutdown Risk
Labor Department: "October Jobs Report Will Not Be Released If Shutdown Occurs"
Concerns Grow Over Fed Policy Amid Data Blackout

On September 29 (local time), all three major indices on the New York Stock Exchange closed higher. After losing momentum last week due to skepticism about the artificial intelligence (AI) rally, the market rebounded on the first trading day of this week, driven by a strong performance from technology stocks.

On this day, the Dow Jones Industrial Average, which is focused on blue-chip stocks, closed at 46,316.07, up 68.78 points (0.15%) from the previous trading day. The S&P 500 Index, which tracks large-cap stocks, rose by 17.51 points (0.26%) to 6,661.21, while the Nasdaq Composite Index, which is centered on technology stocks, climbed 107.085 points (0.48%) to finish at 22,591.154.

By sector, technology stocks, particularly those related to AI, showed strong gains across the board. Leading the way, Nvidia rose by 2.07%. Semiconductor companies AMD and Micron jumped by 1.18% and 4.22%, respectively. Microsoft increased by 0.61%, and Tesla advanced by 0.64%. Shares of Electronic Arts, a U.S. video game company, surged by 4.5% on news that it would be acquired for 55 billion dollars by an investment consortium led by Saudi Arabia's sovereign wealth fund, resulting in the company becoming privately held.

Last week, expectations regarding the duration of the AI-driven bull market weakened, causing all three major indices to decline on a weekly basis. After Nvidia announced on September 23 that it would invest 100 billion dollars in OpenAI, concerns about an AI bubble spread widely. On Wall Street, opinions are divided between those warning of an AI bubble and overvalued stock prices, and those who believe the AI rally will continue.

Venu Krishna, Head of U.S. Equity Strategy at Barclays, commented, "There are no signs of a slowdown in AI capital expenditures, and other industries are also benefiting from a surge in AI infrastructure spending. While concentrated investment should be approached with caution, as AI becomes the focal point of global growth, the S&P 500 Index, which is composed of technology-focused sectors, is in a favorable position compared to other indices."

This week, investors are focusing on the possibility of a federal government shutdown and employment data. As the U.S. Congress has not reached an agreement on a stopgap budget following the expiration of the 2025 fiscal year budget on September 30, some federal agencies face the risk of being shut down starting October 1. To pass the temporary budget prepared by the Republican Party, at least seven Democratic senators must support it in the Senate. In this context, President Donald Trump is scheduled to meet with the Democratic leadership, the opposition party, later in the afternoon. John Thune, the Republican Senate Minority Whip, also told reporters that "the Senate plans to hold another vote on the bill on Tuesday (the 30th) to avoid a government shutdown."

There are growing concerns in the market that if the shutdown risk materializes, it could spill over into monetary policy. In a 73-page contingency plan released on September 26, the U.S. Department of Labor stated that "the Bureau of Labor Statistics (BLS) will cease all operations" in the event of a shutdown, and "any economic data scheduled for release during this period will not be published." The September employment report, scheduled for release on October 3, is a key indicator that will directly impact the Federal Reserve's interest rate decision in October, heightening concerns that the shutdown risk could increase uncertainty in monetary policy. The market expects non-farm payrolls to increase by 51,000, an improvement from 22,000 in August. The unemployment rate is projected to remain at 4.3%.

Kathy Jones, Chief Fixed Income Strategist at Schwab, analyzed, "Given the importance of the job market to the Fed's rate cut decision, the risk of a delay in the September employment report could amplify market uncertainty regarding policy direction."

U.S. Treasury yields are on a downward trend. The yield on the 10-year note, the global benchmark for bond yields, fell by 4 basis points (1bp = 0.01 percentage point) from the previous session to 4.14%, while the 2-year yield, which is sensitive to monetary policy, dropped by 1 basis point to 3.63%.