[New York Stock Exchange] Broad Decline on AI Rally Fatigue and Profit-Taking... Nasdaq Down 0.67%

Selling Pressure Spreads Amid Short-Term Surge Concerns... Oracle and Tesla Down
Investors Remain Unfazed Despite Shutdown, but Prolonged Stalemate Could Hurt
Attention on FOMC Minutes to Be Released on the 8th... Fed Officials' Remarks Also in Focus

The three major indices of the New York Stock Exchange closed lower on October 7 (local time). Amid fatigue from the recent rally, investors engaged in profit-taking, leading the market to pause for breath.

On this day, the Dow Jones Industrial Average, which focuses on blue-chip stocks, ended the session at 46,602.98, down 91.99 points (0.2%) from the previous trading day. The S&P 500 Index, centered on large-cap stocks, fell 25.69 points (0.38%) to close at 6,714.59, while the Nasdaq Index, which is heavily weighted toward technology stocks, dropped 153.304 points (0.67%) to finish at 22,788.363.

By stock, Oracle declined by 2.52%. Reports indicated that its cloud business segment posted profits far below market expectations, intensifying selling pressure. AMD, after surging more than 20% the previous day on news of a large-scale AI chip supply contract with OpenAI, rose another 3.83% on this day. Its competitor Nvidia showed a slight decrease of 0.25%. Tesla fell 4.45% after unveiling a new version of its Model Y electric vehicle, priced $5,000 lower than the previous model.

Recently, investors have continued to buy stocks despite the temporary shutdown of the U.S. federal government. Optimism about artificial intelligence (AI) and expectations for additional interest rate cuts by the Federal Reserve have supported the market. However, profit-taking following the short-term surge and growing caution over an AI bubble led to a market correction on this day.

Anthony Saglimbene, chief market strategist at Ameriprise, told CNBC, "Investor interest in capital expenditures is very high," adding, "It is important for companies to secure or develop the capabilities necessary to expand profits in new AI fields." He also said, "At some point, investors will consider both the scale of investment and returns, and expectations for the results and profitability of the massive investments currently being poured into AI may be adjusted somewhat."

Mark Newton, head of technical strategy at Fundstrat Global Advisors, diagnosed the current market as "overbought," and analyzed that it is important for investors "not to become overly complacent and to remain vigilant."

The U.S. government shutdown has continued for seven days. President Donald Trump stated, "I am willing to cooperate on Democrats' failed healthcare policies or other issues, but they must reopen the government first." This was a call for the Democrats to process the budget bill after the Senate once again rejected a temporary spending bill the previous day. President Trump also mentioned that negotiations are progressing regarding the Democrats' demand to include an extension of Obamacare subsidy payments in the temporary spending bill.

There are concerns that if the shutdown is prolonged, its negative impact on the economy could become more pronounced. Strategist Saglimbene predicted, "As this weekend approaches, furloughed workers may not receive their paychecks, and next week even active-duty military personnel may have to continue working without pay," adding, "There will be increasing pressure on Congress to reach an agreement in some form."

Investors are closely watching the minutes of the Federal Reserve's September Federal Open Market Committee (FOMC) meeting, which will be released the following day. In addition, speeches by Federal Reserve Governor Michael Barr, Chicago Fed President Austan Goolsbee, Dallas Fed President Lorie Logan, and Minneapolis Fed President Neel Kashkari are scheduled, drawing market attention.

U.S. Treasury yields are on the decline. The 10-year Treasury yield, a global benchmark for bond rates, is at 4.13%, while the 2-year yield, which is sensitive to monetary policy, is at 3.57%, both down 2 basis points (1bp = 0.01 percentage points) from the previous day.