Dow Jones Hits Record as Shutdown Deal Nears, AI Sector Feels the Heat

It’s not every day that the market rallies while half the country’s data flow is on hold.

With the U.S. government still in its longest shutdown ever - 42 days and counting - Wall Street seems to have decided that patience will soon pay off. The Senate has reportedly reached an agreement to reopen the government, and investors clearly liked what they heard.

Relief Rally Sends Dow to Record High

The Dow Jones Industrial Average jumped 1.2%, closing at a new record, while the S&P 500 clawed back earlier losses.

The bond market was closed for Veterans Day, so all eyes were on equities. Historically, the S&P 500 tends to gain around 2.3% in the month following a government reopening. If that pattern repeats, we could be looking at 7,000 points by mid-December, though, admittedly, that’s a pretty big if.

The rally was powered by classic optimism: once the government reopens, investors expect key economic data - such as the September jobs report - to finally be released, giving the Federal Reserve some much-needed guidance on interest rate policy.

SoftBank Walks Away, Nvidia Stumbles

While the Dow broke records, Nvidia (NVDA | -2.96%) couldn’t keep up. Just a day after a 6% surge, the AI chip titan lost roughly $170 billion in market value after SoftBank confirmed it had sold its entire stake in Nvidia last month for about $5.8 billion. Timing-wise, that exit couldn’t have been worse for sentiment in the AI space.

Nvidia’s rival Advanced Micro Devices (AMD | -2.65%) also had a rough day, despite using its first-ever analyst event to highlight ambitious AI growth projections. The company sees the total AI chip market hitting $1 trillion by 2030, a bold claim, but apparently not bold enough to impress investors.

Adding to the sector’s woes, CoreWeave ( CRWV | -16.31%) - a key player in AI-focused cloud computing - tumbled 16.3% amid production setbacks and concerns over rising debt levels.

Winners in the Mix

Not all stocks followed Big Tech lower.

FedEx (FDX | +5.45%) delivered a strong performance, raising its profit outlook ahead of the critical holiday season. And while Paramount Skydance (PSKY | +9.77%) posted lackluster earnings, the newly merged media giant won back investors with an upbeat long-term forecast, aiming for $30 billion in revenue by 2026, largely driven by streaming growth.

A more surprising rebound came from UniQure (QURE | +17.93%), which recovered after recent FDA-related turbulence over its Huntington’s disease therapy. The company reported higher Q3 revenue, though losses nearly doubled.

Macro Notes: Quiet but Constructive

Macro news took a back seat, but a few data points are worth noting.

The NFIB Small Business Confidence Index fell again in October, down to 98.2 from 98.8 in September, hardly a disaster, but a sign that small business owners remain cautious. Meanwhile, oil prices climbed about 1.5%, gold and silver rose further, and the euro/dollar pair traded around 1.1587.

Final Thoughts

So, where does this leave us?

The shutdown drama may be nearing its finale, the Dow just set a new record, and investors are daring to hope for a soft landing once again. Yet, the weakness in AI stocks shows that even the market’s darlings aren’t bulletproof, especially when valuations are stretched and the tide of hype starts to recede.

If Washington keeps its promise and reopens shop this week, we might just get a short-term relief rally. But as history has taught us, optimism can be a slippery slope, especially when algorithms, politics, and human emotion collide on Wall Street.

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Kristoff - ChartMill

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