The Dow Jones Industrial Average soared more than 300 points, or nearly 0.7%, Wednesday as investors looked ahead to the end of the record-breaking government shutdown.
The blue-chip index finished at a record high of 48,254.82, its second straight record close. The S&P 500 was roughly flat, while the Nasdaq dipped about 0.3% as fears of an AI bubble lingered.
Still, news that lawmakers were working to reopen the government was welcome to investors.
On Monday night, the Senate passed a spending bill that has since been moved to the House, which is expected to vote on the legislation Wednesday night.
Along with restoring SNAP benefits, an end to the shutdown will also resume economic data on the labor market and inflation – reports that Fed officials lean on to make interest-rate decisions.
The halt in many key government operations entered its 43rd day on Wednesday.
Financial stocks largely led the Dow’s rally as shares in Goldman Sachs, JPMorgan and American Express rose. All three stocks hit new records throughout the day.
Morgan Stanley and Bank of America also notched new all-time highs.
The Financial Select SPDR Fund, which tracks S&P 500 financial stocks, rose nearly 1%.
“There is a simple reason that stocks are up so much, and that’s because S&P earnings have handily beaten street estimates time after time this year,” Michael Landsberg, chief investment officer at Landsberg Bennett Private Wealth Management, said in a note Wednesday.
As government data resumes, investors “will see if market positioning has been correct and it is still clear sailing or if there is a big repricing necessary,” he added.
Volatility in the tech sector continued Wednesday as investors have ping-ponged on whether AI firms are overvalued, leading to a massive sell-off last week.
Shares in AMD climbed 9% after CEO Lisa Su called artificial intelligence “the right gamble” – adding that the company expects revenues to rise 35% per year over the next three to five years on “insatiable” demand for AI chips.
But shares in Oracle, Palantir and Meta fell 3.9%, 3.6%, and 2.9%, respectively.
Investors fear that tech firms are shelling out too much capital on data centers and AI opportunities – worried that the AI sector is reminiscent of the “dot-com bubble” of the 1990s and 2000s.
But these so-called “bubbles” can last a long time, Landsberg argued.
“Rather than worrying about AI bubbles, we see other risks, such as not having enough overall AI exposure as an investment theme, or having too much exposure to just a few stocks and not being diversified and thinking that AI is a US-only story,” he wrote.
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