US stock markets at record high: S&P 500 and Nasdaq surge; rate cut hopes boost optimism despite government shutdown
The S&P 500 and Nasdaq indices reached unprecedented levels when markets opened on Thursday, driven by fresh optimism regarding potential interest rate reductions, whilst investors prepare for minimal economic data releases as the week concludes.At market opening, the Dow Jones Industrial Average gained 20.0 points, representing a 0.04% increase, reaching 46,461.11. The S&P 500 advanced by 20.1 points or 0.30%, opening at 6,731.31, and the Nasdaq Composite climbed 130.7 points, equivalent to 0.57%, touching 22,885.905 at the start of trading.Technology stocks surged again following OpenAI’s announcement of partnerships with South Korean firms for its Stargate AI infrastructure project. Additionally, Nvidia rose 1.7 percent at the start of trading, while other tech firms remained in focus due to broader AI-related optimism. Tesla shares also climbed 1.6 percent after reporting a 7 percent increase in third-quarter sales.Stock indexes also climbed across Europe and Asia, while Treasury yields remained relatively steady after a US government shutdown delayed the weekly unemployment claims report. The US government went on a formal shutdown on October 1 after Republicans and Democrats failed to reach an agreement on federal fundingMeanwhile, Wall Street is hoping the US job market slows just enough to persuade the Federal Reserve to continue cutting interest rates—but not so much that it triggers a recession. Striking this balance is tricky, and delays in government economic reports add to the uncertainty. With stocks already hitting record highs on expectations of rate cuts, any sign that the cuts may not materialize could push the market lower.Investors currently expect nearly a 99 percent chance of a Fed rate cut later this month and an 87 percent chance of another cut in December.Wednesday’s ADP report showed the US private sector shed jobs in September, contrary to expectations of growth. Analysts said the weak data strengthens the case for Fed rate cuts in the coming months, though a partial government shutdown has delayed key economic reports, adding uncertainty.“The data emboldens calls for the Fed to ease rates in the months ahead,” said Joshua Mahony, chief market analyst at Scope Markets, as quoted by AFP.
