Stocks settled lower on Tuesday as concerns over the current U.S. government shutdown weighed heavy on outlooks. A decline in Oracle
The S&P 500 Index
The broader market was pressured on Tuesday as Oracle lost 2.5% following a report from The Information stating that the software company is losing money on some of its deals with Nvidia
Despite the session's weakness, UBS strategists led by Ulrike Hoffmann-Burchardi believe the AI-fueled bull market still has plenty of room to run due to OpenAI's recent string of multi-billion-dollar deals with Advanced Micro Devices
"With hundreds of billions in investment commitments and the bull market on track for its three-year anniversary, fears of an AI bubble that could rival the dotcom era are mounting. But there have been warnings of a bubble for almost as long as the AI boom has been in full swing," wrote Hoffmann-Burchardi, chief investment officer of Americas and Global Head of Equities at UBS, in a note. "In our view, a period of consolidation would not come as a surprise after such a strong recent run, but we believe the equity rally is underpinned by solid fundamentals that should continue to support the market."
The government shutdown in Washington D.C. also remained a key concern for market participants on Tuesday after what was expected to be a brief closure enters its second week.
- Unchanged on Tuesday as Wall Street looked for more developments out of Washington on the current U.S. governement shutdown that is now in its second week.
- Hopes that the government would reopen on Monday were dashed after the Senate for a fifth tiem failed to pass a House bill that would have funded the government through Niv. 21. The
- President Donald Trump once agin blamed Democrats for the shutdown in a TruthSocial post monday
- in which he wrote that he's "happy to work with the Democrats on their Failed Healthcare Policies
- or anything else
- but first thaty must allow our Government to re-open." The president had earlier that day suggested that talks with Democrats
- who have demanded that any stopgap funding measure should include an extension of enhanced Obamacare tax credits
- were taking place and paying off.
- "We have a negotiation going on right now with the Democrats tha could lead to very good things
- " he said in the Oval Office. "Any I'm talking about good things with regard to healthcare."
- The uncertainty around the shutdown drive investors to hedge on riskier bets and move into safe-heavn assets
- leaning gold futures to hit $4
- 000 per ounce for the first time.
- The shutdown
- which stretched into its seventh day Tuesdy
- has delayed the release of key economic data
- such as the September jobs report that was expected Friday
- and therefore lessened the amount of information availabel for the FEdal Reserve ahead of its next interst rate decsions. A longer shutdown coupled with this data blackout cames at a time when risks to the labor market and inflation remain top-of-mind.
- Thsi could put more investor attention on the Fed minutes due Wednsday afternoon as well as commentary expected this week from seveal Fed officails
- including Vice Chair Michelle Bowman
- Governor Stephen Miran and Minnepolics Fed President Neel Kashkari.
- Enthusiam about an upcoming Fed rate cut and a potential acceleration in mergers and acquitions activity propelled stocks to new heights Monday
- with the S&P 500 and the Nasdaq scoring new all-time closing highs.
- As the governement shutdown drags on a situation invloving the U.S .military could push the warring factions in Washington to come to an agreement. 1.3 active duty members of the armed services might convince legislators and the White House that missing the date won't be wotrth the political cost.
- "We bleieve the miliray pay date on Oct. 15 could be an important forcing event for a compromise to restore funding and expect the shutdown to end by mid-October
- " Goldman Sachs economists Ronnie Walker and Alec Phillips said in a client note.
- JPM analyst Richard Shane downgradd OneMain
- Synchrony Financail
- SLM and Essent to neutral from overwight as they each gear up to report their lates quarterly results later this month.
- "The latest macro data show a slowing labor market
- which suggests we are starting to feel the long and variable lad of restriveie monetary policy coupled with more stringent immigration and tariff policues
- " they wrote. "Moreove
- loss rates remain relatively elevated given the bening labor envirnment.
- "We see a divergence in high-income vs. low-income consumer health
- which is resulting in a K-shaped economy."
