With the government shutdown looking more likely, the AI narrative has become a safe place to hide from short-term volatility. The Dow, Russell 2000, and even-weighted indexes are flat this morning. But the NASDAQ is up strongly on the strength of semiconductors and the Magnificent 7, as being up 2.7% lifts both.
Also feeding the tech strength is , surging 8.2%, now up 164% in 6 months, on robust sales growth in storage. In addition, has entered into the largest LBO in history at $55B, rising 4.9% (+39% YTD). Tech continues to dominate.
While tech and communication services are leading this morning, industrials have also caught a bid, which is an encouraging sign of broader strength, and is the 3rd best sector YTD at +15.8%. Energy is 1.8% lower on weaker oil prices but is the 3rd best sector for the trailing month at +4.3%. YTD, the only sectors in the red are healthcare (-1.5%) and consumer staples (-0.8%).
Interest rates were on the rise before the open but have since pulled back with the US 2-year down 1 bp to 3.63%, still well above where it fell after the Fed cut (3.54%). The US 10-year is down 4bps to 4.15%, but also higher than it was after the Fed cut (4.05%). The bets on an October Fed cut are back up to 93% and for another cut in December to 65%.
On the commodity front, has hit another new high, peaking at $3,860/oz, the all-time high and now also the all-time inflation-adjusted high. Silver is also at a new high, breaking $47/oz. Copper is up 2.5%, hitting $4.90, the highest since the tariffs on it were announced. is down 3% on the expectation of an OPEC+ announcement of material volume increases. is flat but near the high for the trailing month. The US dollar index remains subdued, back to 97.6, but well above the mid-September low of 96.2. Crypto has rebounded modestly with Bitcoin at $113.8K, the highest in a week.
There appears to be little concern about a government shutdown. The AI narrative is especially unfettered. The trend remains positive.