US Stocks End Winning Week on AI Fervor Amid Government Shutdown
US stocks concluded a positive week on Friday, driven by strong interest in artificial intelligence, despite the delayed release of the monthly jobs report due to the ongoing government shutdown. The market's resilience underscores investor confidence despite economic uncertainties.
Market Performance Highlights
The Dow Jones Industrial Average (^DJI) briefly hit 47,000 before closing up 0.5%, achieving a new all-time high. Similarly, the S&P 500 (^GSPC) managed a slight gain, also reaching a record high. In contrast, the Nasdaq Composite (^IXIC) experienced a decline of 0.3%, dragged down by a dip in Tesla (TSLA) stock.
Despite Friday's mixed performance, all three major averages recorded weekly gains exceeding 1%. This positive trend highlights a generally optimistic market sentiment prevailing throughout the week.
Impact of the Government Shutdown
Wall Street has largely dismissed the initial effects of the US government shutdown. However, the shutdown's impact became apparent on Friday with the postponement of key economic data releases. This lack of information left both Wall Street and the Federal Reserve without crucial insights into the labor market.
In the absence of official data, investors relied on alternative private sources, which indicated a notable slowdown in the labor market this week. Despite these concerns, the overall upward trend in stocks persisted, primarily fueled by enthusiasm surrounding AI.
AI Developments Fuel Market Optimism
The surge in stock prices can be attributed to the sustained excitement surrounding artificial intelligence. The valuation of OpenAI, a leader in AI development, has soared to $500 billion, solidifying its position as the most valuable startup worldwide. New partnerships and deals in the AI sector further boosted market confidence.
Specifically, Hitachi LTD (6501.T) has partnered with OpenAI (OPAI.PVT) on energy projects, while Fujitsu (6501.T) has expanded its collaboration with Nvidia (NVDA). Additionally, the pharmaceutical sector demonstrated exceptional performance, poised to record its best week in over a decade.
Shutdown Stalemate Continues
As of Friday, there was no immediate resolution in sight for the government shutdown. Democrats are insisting on the continuation of healthcare subsidies as a prerequisite for funding the government. Republicans, conversely, refuse to engage in negotiations until the government is operational again. Adding to the complexity, President Trump has intensified threats to terminate federal employees and defund projects in states leaning towards the Democratic Party.
