[New York Stock Exchange] Market Takes a Breather After 'AI Rally'... All Three Major Indices Fall While Nvidia Hits Record High

Market Takes a Breather After One-Day Rally
AI Optimism and Overvaluation Concerns Coexist, Leading to Repeated Corrections After Rallies
Nvidia Rises 1.8% on U.S. Government Approval for Semiconductor Exports
Focus Shifts to Third-Quarter Corpor

On October 9 (local time), all three major indices of the New York Stock Exchange closed lower. After the previous day saw renewed optimism about artificial intelligence (AI) that drove the S&P 500 and Nasdaq to record highs, the market appeared to pause for breath. Amidst this, Nvidia, the leading AI stock, reached a new all-time high on this day.

On this day at the New York Stock Exchange, the blue-chip Dow Jones Industrial Average closed at 46,358.42, down 243.36 points (0.52%) from the previous trading day. The large-cap S&P 500 Index fell by 18.61 points (0.28%) to 6,735.11, and the tech-heavy Nasdaq Index dropped by 18.752 points (0.08%) to 23,024.626.

By stock, Nvidia rose 1.83% to close at $192.57 per share, setting a new all-time high. The news that the U.S. government had approved billions of dollars worth of Nvidia semiconductor exports to the United Arab Emirates (UAE) served as a positive catalyst. Oracle also surged by 3.06%. Delta Air Lines jumped 4.29% after reporting third-quarter revenue and profit that exceeded market expectations. In contrast, Tesla fell 0.72% following news that U.S. auto safety regulators had launched an investigation into accidents related to its autonomous driving software. Apple declined by 1.56%, and Microsoft fell by 0.47%.

The stock market is showing a pattern of alternating rallies and corrections as AI optimism coexists with concerns about overvaluation. In particular, the previous day, Nvidia CEO Jensen Huang reignited AI optimism, lifting the market. When CEO Huang commented that "computing demand has increased significantly over the past six months," expectations for an AI rally outweighed concerns about a bubble. Additionally, growing expectations for further interest rate cuts by the Federal Reserve improved investor sentiment. However, given that the market has surged by 36% since April, there was a pause after just one day of gains.

David Wagner, Head of Equities at Aptus Capital Advisors, said, "Since the crash in April, the market has continued to surge," adding, "Some argue that the stock market is overheated and needs to take a breather, but at the same time, traditional value-buying strategies have firmly taken root." He continued, "This market is steadily trending upward. However, there is internal sector rotation, so there can be significant volatility or impact even within a single day."

The U.S. federal government shutdown has continued for nine days amid a standoff between the two parties. The Senate put a temporary budget bill to a vote again on this day, but it was rejected once more. This marks the seventh rejection. Both the Republican and Democratic parties proposed budget bills, but neither was able to secure the 60 votes needed for passage.

In this situation, President Donald Trump stated at a cabinet meeting held at the White House on this day, "We will only cut Democratic programs." He warned, "There are programs that are very popular with Democrats but, frankly, not popular with Republicans. This is what they (the Democrats) wanted, and they will have to taste the medicine they made themselves." He effectively used the threat of budget cuts to policies and projects popular in Democratic-leaning areas or among Democratic supporters as leverage to demand cooperation on passing a temporary budget bill.

Investors are now focused on third-quarter corporate earnings announcements. Major financial institutions such as Goldman Sachs and Citigroup are scheduled to announce their results next week. On the 22nd, Tesla, one of the "Magnificent 7," will be the first to release its third-quarter earnings. Alphabet, the parent company of Google, Microsoft, and Meta will announce their results on the 29th. Depending on the performance of these large tech companies, the market will gauge whether the AI investment boom is overheated or based on real growth.

Aidan Yao, strategist at Amundi Investment Institute, analyzed, "Expectations are skewed to one side, and with valuations high, investors are focusing on earnings," adding, "Investors want to see whether earnings are truly catching up with valuations."

U.S. Treasury yields are moving within a narrow range. The benchmark 10-year yield, a global bond market indicator, stands at 4.14%, while the 2-year yield, which is sensitive to monetary policy, is at 3.59%, each up by 1 basis point (1bp = 0.01 percentage point) from the previous day.