Stocks surged to new records on Wednesday, as Wall Street appeared largely unfazed by the ongoing shutdown of the US government. Meanwhile, bond yields plummeted following the release of discouraging economic indicators.
The S&P 500 climbed 0.3 percent, surpassing its previous all-time high set last week. The Dow Jones Industrial Average gained 43 points, or 0.1 percent, marking a new record, while the Nasdaq composite increased by 0.4 percent. In Australia, the sharemarket is expected to open higher, with futures at 6:05 AM AEST indicating a 48-point rise, or 0.5 percent. The ASX had dipped slightly by less than 0.1 percent on Wednesday. The Australian dollar was trading at US66.12¢ at 6:18 AM AEST.
Wall Street’s Resilience Amid Government Shutdown
The announcement comes as Wall Street investors continue to show resilience despite the political turmoil in Washington. Tesla’s shares rose 3.3 percent ahead of the company’s earnings report on Friday morning AEST. Analysts, as compiled by Bloomberg, estimate that Tesla delivered approximately 439,600 vehicles worldwide in the third quarter. This figure, although representing a 5 percent year-over-year decline, offers relief to investors after a challenging first half of the year.
Tesla’s share surge pushed Elon Musk’s personal wealth over the $US500 billion mark, making him the first individual to achieve this milestone, according to Forbes.
Meanwhile, Treasury yields dropped after a report suggested weaker-than-expected hiring across the US. The ADP Research survey indicated that employers outside the government cut 32,000 more jobs than they added, with significant losses in the Midwest. The survey also revised its August employment figures downward, highlighting a loss of 3,000 jobs instead of the previously reported gain of 54,000.
Economic Uncertainty Amid Delayed Data
Usually, Wall Street traders rely on the comprehensive jobs report from the US government to assess the labor market’s health. However, the next Labor Department report, scheduled for Friday, is likely to be delayed due to the government shutdown.
“Whether this is an accurate statistic or not, people in the markets believe that it signals something,” said Carl Weinberg, chief economist at High Frequency Economics. “The signal from today’s headline will not be a good one.”
The hope on Wall Street is that the job market will slow just enough to prompt the Federal Reserve to continue cutting interest rates, without triggering a recession. The delay in government reports adds uncertainty to this delicate balance, potentially impacting market expectations.
Market Reactions and Global Implications
Despite the shutdown, stock markets have historically weathered such disruptions, especially if they are short-lived. However, this shutdown could be different, with potential implications for federal employment and economic policy.
In other market movements, Nike’s stock rose 6.4 percent after exceeding profit expectations for the latest quarter, driven by strong apparel sales in North America. Lithium Americas saw a 23.3 percent jump in its US-traded stock after securing a $2.26 billion loan from the US government, which will take an ownership stake in the company.
Conversely, Peloton Interactive’s shares fell 3.7 percent following a lukewarm reception to its new AI and computer vision system. Corteva dropped 9.1 percent after announcing plans to split into two separate companies. Cal-Maine Foods also saw a 1.2 percent decline after missing profit and revenue expectations.
Overall, the S&P 500 rose 22.74 points to 6,711.20, the Dow Jones Industrial Average added 43.21 to 46,441.10, and the Nasdaq composite climbed 95.15 to 22,755.16.
In international markets, European indexes rose following a mixed performance in Asia. As the global economy navigates these turbulent times, investors remain watchful of developments in both economic data and geopolitical events.
