Nasdaq Surges on AI Hopes, US Indices Drag by Shutdown
The US stock market today experienced a mixed day on Tuesday, October 4, with the Nasdaq 100 index surging at the start of trading, while other important US indices were held back due to the ongoing US government shutdown. No additional interest rate cuts were announced by the Federal Reserve, but investors are hopeful for more reductions later this month.
The Nasdaq exchange kicked off the day with a significant gain, driven by the trend theme of 'Artificial Intelligence' and strong valuation increases for OpenAI, the provider of ChatGPT. However, the broader US indices were hindered by the government shutdown, which has halted the release of crucial economic data. The US government shutdown has also delayed the publication of the September jobs report, which was initially scheduled for Friday.
The shutdown has also impacted the release of weekly job market data and industrial orders, which were not published on Thursday as planned. Despite these setbacks, investors are looking ahead to the US central bank's next monetary policy decisions, set to be announced at the end of October. The probability of a further interest rate cut by the US central bank is now seen at 99 percent, according to the FedWatch tool. This optimism is fueled by the weak data released by the private sector service provider ADP on the previous day.
OpenAI's valuation has reportedly reached around half a trillion US dollars through a new placement of employee shares, around 200 billion dollars higher than in April. As the US stock market today navigates the government shutdown and awaits the Fed's decision, investors remain hopeful for further interest rate cuts and continued growth in the tech sector.
