NEWS

US stocks mixed during trading on Thursday, October 2, as investors shrugged off concerns related to the recent US government shutdown.

After hitting an all-time high during trading, the S&P 500 index fell slightly by 0.01%, while the Nasdaq Composite index rose by 0.3%, setting a new record high for the day. The Dow Jones Industrial Average fell 83 points, or about 0.2%.

Nvidia shares rose more than 1%, also reaching an all-time high, as investors continued to invest in the AI ​​giant's stock.

This comes after the three major US stock indexes closed higher on Wednesday, on hopes that the federal funding cut would be short-lived and thus limit any serious impact on the US economy.

The S&P 500 closed above the 6,700 mark for the first time. The Dow Jones Industrial Average also saw a record close in the previous session.

“The stock market has generally performed positively during most of the funding shutdowns, suggesting little evidence that funding shutdowns pose a reasonable risk to stock performance,” Wagner added.

The U.S. government shutdown began after top Democrats and Republicans failed on Tuesday to meet a deadline to agree on a deal that would keep the government funded. Lawmakers have traded blame for the shutdown, with Democrats sticking to their demands to use the measure to extend health care tax credits for millions of Americans.

The biggest question for investors right now is how long the impasse will last. It is likely to last at least three days, as the Senate is scheduled to recess on Thursday for Yom Kippur, leaving Friday as the next day members are expected to vote again, according to NBC News.

In speculation markets, traders are betting that the shutdown could last for nearly two weeks.

For his part, Niles Investment Management founder and portfolio manager Dan Niles wrote in a Tuesday post on the X platform: “I believe this government shutdown could last longer than the one in 2018, but ultimately, other factors will be more important, such as 1) the strength of upcoming Q3 earnings, 2) the continued AI euphoria with the G7 reporting strong quarterly results, and 3) the upcoming Fed meeting on October 29, with my expectation that the Fed will maintain its path of three rate cuts this year.”

Historically, the stock market has not been significantly affected by government shutdowns, but investors are paying more attention this time around due to the political and macroeconomic volatility, high equity valuations, and high levels of concentration amid an AI-led rally, along with ongoing inflation concerns.