[New York Stock Exchange] Rally on Hopes of Shutdown Resolution... Nasdaq Soars 2.3% Led by Strong AI Stocks

U.S. Congress Moves to End Shutdown
Risk Appetite Revives Among Investors
AI-Related Stocks Like Nvidia and Palantir Surge

On November 10 (local time), all three major indices of the New York Stock Exchange closed higher. As the U.S. federal government shutdown, which had lasted a record 41 days, began moving toward a resolution, investor appetite for risk assets rebounded. In particular, stocks related to artificial intelligence (AI) led the rally with strong gains.

On the 10th (local time), traders are working on the trading floor of the New York Stock Exchange (NYSE) in the United States. Photo by UPI

On this day, the blue-chip Dow Jones Industrial Average ended the session at 47,368.63, up 381.53 points (0.81%) from the previous trading day. The S&P 500 index, which focuses on large-cap stocks, rose by 103.63 points (1.54%) to close at 6,832.43. The tech-heavy Nasdaq index surged by 522.637 points (2.27%) to finish at 23,527.174.

By sector, AI-related stocks showed particularly strong performance. Nvidia soared by 5.79%. Palantir jumped by 8.81%. Broadcom gained 2.56%, and Oracle increased by 0.66%. Microsoft rose by 1.85%, while Alphabet, the parent company of Google, and Meta, the parent company of Facebook, posted gains of 3.9% and 1.62%, respectively.

Last week, the U.S. stock market declined due to valuation concerns stemming from overheated AI investment. However, expectations for the end of the shutdown improved investor sentiment, resulting in a surge of buying. Last week, the Nasdaq index fell by about 3%, marking its worst weekly performance since the announcement of reciprocal tariffs in April. The S&P 500 and Dow Jones indices also dropped by 1% each.

Investors are now closely watching the congressional negotiations to end the shutdown. The previous day, some centrist 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.

The agreement includes the resumption of government operations through January next year and the reversal of some federal employee layoffs. However, the extension of Obamacare subsidies, which the Democrats had advocated, was excluded. The agreement is expected to take effect after passing the full Senate, gaining approval from the House of Representatives, and being signed by President Donald Trump. Mike Johnson, the Republican Speaker of the House, urged lawmakers to gather in Washington, D.C. for a prompt vote on the agreement.

As the shutdown drags on, concerns are mounting over its negative impact on the U.S. economy. The University of Michigan’s Consumer Sentiment Index for November, released on November 7, fell by 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 warned of the possibility of negative growth for the fourth quarter if the shutdown continues. Kevin Hassett, Chairman of the White House National Economic Council (NEC), said in a CBS interview the previous day, "Thanksgiving is one of the hottest periods for the economy during the year," adding, "If people do not travel during that time, we could see negative growth in the fourth quarter." The Thanksgiving holiday is the biggest holiday and travel season in the United States, and concerns have been raised that reduced flights due to air traffic controller shortages could dampen overall consumer spending in sectors such as lodging, dining, and retail.

Tim Holland, Chief Investment Officer (CIO) at Orion, said in an interview with CNBC, "November has been a tough month for risk assets, but at least one of the three factors that have recently weighed on investor sentiment-shutdown, high valuations, and concerns about an AI bubble-has been resolved." He added, "Considering the end of the government shutdown, a large-scale tax cut bill, 13% year-over-year earnings growth, and seasonal factors providing tailwinds, I remain quite optimistic about the economy and risk assets through the end of the year."

Michael Brown, an analyst at Pepperstone, commented, "Given that the restoration of funding will remove a headwind to growth and resolve much of the uncertainty that had clouded the outlook, the market's reaction is rational." He further noted, "If that happens, investors can once again focus 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 on the rise. The yield on the 10-year U.S. Treasury note, the global benchmark for bond yields, rose by 2 basis points (1 bp = 0.01 percentage point) from the previous day to 4.12%. The yield on the 2-year U.S. Treasury note, which is sensitive to monetary policy, increased by 3 basis points from the previous day to 3.59%.