The S&P 500 Index ($SPX) (SPY) on Tuesday closed down -0.38%, the Dow Jones Industrials Index ($DOWI) (DIA) closed down -0.20%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed down -0.55%. December E-mini S&P futures (ESZ25) fell -0.37%, and December E-mini Nasdaq futures (NQZ25) fell -0.54%.
Stock indexes gave up an early advance on Tuesday and turned lower as most chipmakers retreated following Monday’s surge. The S&P 500 and Nasdaq 100 initially rallied to new all-time highs on Tuesday, driven by strength in chipmakers and AI infrastructure stocks. Advanced Micro Devices rose more than +3% Tuesday, adding to Monday’s +23% surge due to the spending boom in artificial intelligence.
Optimism that growth in the AI sector and spending on artificial intelligence will translate into corporate profits is a major bullish factor for stocks. Stocks are also underpinned by hopes that a resilient US economy and additional Fed easing will continue to support the economy.
US Aug consumer credit rose by +$0.363 million, weaker than expectations of +$14.000 billion and the smallest increase in six months.
Hawkish Fed comments were negative for stocks. Monday evening, Kansas City Fed President Jeff Schmid said, “With inflation still too high, monetary policy should lean against demand growth to allow the space for supply to grow and relieve price pressures in the economy.” On Tuesday, Minneapolis Fed President Neel Kashkari said, “Some of the data we’re looking at is sending some stagflationary signals,” and that any drastic cuts to interest rates would risk stoking inflation.
The shutdown of the US government is now into its second week, weighing on market sentiment and delaying key economic reports. The government shutdown means delays in the release of government reports, including Tuesday’s international trade data for August and last Friday’s monthly payroll report. A prolonged shutdown could also delay the government’s inflation data, scheduled for release on October 15. The White House has warned that if the government…
..
