U.S. Congress Moves to End Shutdown
Risk Appetite Revives on Shutdown Resolution Prospects
AI Stocks Rally, Led by Nvidia, Oracle, and Palantir
On November 10 (local time), the three major U.S. stock indexes opened higher on the New York Stock Exchange. As the U.S. federal government shutdown, which has lasted for 41 days as of this date-the longest in history-enters the process of being lifted, investor appetite for risk assets is reviving. In particular, artificial intelligence (AI)-related stocks are leading the rally with strong gains.
As of 9:58 a.m. on the New York Stock Exchange, the blue-chip Dow Jones Industrial Average was up 179.74 points (0.38%) from the previous trading day, standing at 47,166.84. The S&P 500 Index, which focuses on large-cap stocks, rose 80.49 points (1.2%) to 6,809.29, while the tech-heavy Nasdaq Index surged 459.212 points (2%) to 23,463.749.
By sector, AI-related stocks are showing strong performance. Nvidia is up 3.3%. Broadcom has risen 1.67%, and Oracle is up 1.97%. Palantir has soared 6.4%.
Although the U.S. stock market declined last week due to valuation concerns stemming from overheated AI investments, improved investor sentiment driven by expectations of the shutdown ending is bringing in buyers. Last week, the Nasdaq fell by about 3%, marking its worst week since the announcement of reciprocal tariffs in April, while the S&P 500 and Dow Jones also dropped by 1% each.
The market is currently focused on congressional negotiations to end the shutdown. The previous day, some moderate Democratic senators broke ranks with party leadership and shifted to support the Republican compromise bill. As a result, the Senate passed a procedural vote to bring the temporary budget bill to the floor by a margin of 60 to 40.
This agreement includes the resumption of government operations until January next year and the reversal of some federal employee layoffs. However, the extension of Obamacare subsidies, which Democrats had advocated, was excluded. The agreement is expected to take effect after passing the Senate floor, approval by the House of Representatives, and the signature of President Donald Trump.
As the shutdown drags on, concerns are mounting about its negative impact on the U.S. economy. The University of Michigan's November Consumer Sentiment Index, released on November 7, fell 3.3 points from the previous month to 50.3. This is the lowest level in three years, since June 2022 (50), when inflation fears peaked.
The White House has also warned of the possibility of negative growth in the fourth quarter if the shutdown continues. Kevin Hassett, Chair of the White House National Economic Council (NEC), said in a CBS interview the previous day, "Thanksgiving is one of the hottest seasons in the economy," and predicted, "If people do not travel during that time, we could see negative growth in the fourth quarter." The Thanksgiving holiday is the largest holiday and peak travel season in the U.S., and there are concerns that reduced flights due to a shortage of air traffic controllers could dampen overall consumer spending in sectors such as lodging, dining, and retail.
Michael Brown, an analyst at Pepperstone, commented, "Given that the headwinds to growth will dissipate with the restoration of funding and much of the uncertainty that has clouded the outlook will be resolved, the market's reaction is rational." He added, "If that happens, investors can refocus on bullish factors such as a robust economy, resilient corporate earnings growth, a more accommodative monetary policy environment, and easing trade tensions."
U.S. Treasury yields are steady. The 10-year Treasury yield, a global benchmark, is at 4.1%, while the 2-year Treasury yield, which is sensitive to monetary policy, is at 3.57%, each up 1 basis point (1bp = 0.01 percentage point) from the previous day.
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