[New York Stock Market] Dow Hits Record High as Shutdown Nears End... Nasdaq Falls on AI Valuation Concerns

US Senate Passes Temporary Spending Bill, Shutdown Nears End
Funds Shift to Healthcare Stocks Amid Tech Weakness
SoftBank Sells Nvidia Stake, AI Valuation Concerns Intensify
US Private Sector Job Growth Slows in October
"Average Weekly Jobs Do

The three major indices of the New York Stock Exchange closed mixed on November 11 (local time). Investor sentiment was revived as the countdown began for the resolution of the federal government shutdown. However, declines in artificial intelligence (AI) related stocks due to valuation concerns, as well as weak employment data, limited the upward momentum.

Traders are working on the floor of the New York Stock Exchange (NYSE) in the United States. Photo by UPI Yonhap News

On this day at the New York Stock Exchange, the blue-chip-focused Dow Jones Industrial Average rose by 559.33 points (1.18%) from the previous trading day to close at 47,927.96, marking an all-time high. The S&P 500 Index, which tracks large-cap stocks, gained 14.18 points (0.21%) to end at 6,846.61, while the tech-heavy Nasdaq Composite fell 58.874 points (0.25%) to finish at 23,468.301.

As concerns about overvaluation of AI-related stocks grew, there was a notable rotation from technology stocks into healthcare stocks. By individual stock, pharmaceutical company Merck rose 4.84%, while Amgen and Johnson & Johnson climbed 4.57% and 2.98%, respectively. In contrast, Nvidia fell 2.96% following news that Japan’s SoftBank sold its entire stake for $5 billion. CoreWeave plunged 16.31% after releasing a disappointing earnings outlook. Palantir dropped 1.37%, and Broadcom and Oracle declined by 1.79% and 1.92%, respectively.

Investors are closely watching whether the U.S. federal government shutdown will be resolved this week. The U.S. Senate passed a temporary budget bill the previous day with 60 votes in favor and 40 against. Now, only a House vote and the signature of President Donald Trump remain, leading to expectations that the shutdown will soon be lifted. Although the bill did not include an extension of Obamacare subsidies demanded by the Democrats, some moderate Democratic lawmakers voted in favor of the Republican proposal due to the ongoing shutdown, which had reached its 41st day as of the previous day. In return, they received a promise that the Senate would vote on the Obamacare subsidy extension.

Once the shutdown ends, the release of inflation and employment data is also expected to resume soon. As a result, the burden on the Federal Reserve to decide on the benchmark interest rate at next month’s Federal Open Market Committee (FOMC) meeting, amid a lack of key economic indicators, is expected to be reduced.

Sonu Varghese, global macro strategist at Carson Group, said, "Once government operations resume, we will be able to access macroeconomic data again," adding, "This will help ensure that the Fed does not go into the December meeting without any information." He also commented, "The period during which the shutdown could continue to negatively impact the economy-such as through unpaid wages, reduced consumption, and weaker travel-was drawing closer. The visible end of the shutdown has removed another risk factor from the market and the economy."

However, the weak performance of AI-related stocks limited the gains in the indices, and the Nasdaq ultimately closed lower.

Bill Fitzpatrick, portfolio manager at Logan Capital Management, said, "These technology companies are great cash-generating machines, but the starting point matters," adding, "Given current valuation levels, even a bit of negative news could shake market sentiment. As a result, we may see funds move in favor of value stocks."

Weak employment data also weighed on investor sentiment. According to an employment report released by private labor market research firm ADP, new private-sector jobs decreased by an average of more than 11,000 per week over the four weeks ending October 25, compared to the previous month. Previously, ADP’s report last week stated that private-sector employment in October increased by 42,000 compared to the previous month, meaning there was an average weekly increase of more than 10,000. However, the latest report suggests that the labor market slowed significantly toward the end of October compared to the beginning of the month.

U.S. Treasury yields are trending lower, particularly for long-term bonds. The yield on the benchmark 10-year U.S. Treasury note, a global bond market benchmark, is at 4.06%, down 4 basis points (1bp = 0.01 percentage points) from the previous day. The yield on the 2-year U.S. Treasury note, which is sensitive to monetary policy, remains at 3.59%, the same as the previous day.