US: Wall Street jumps, Nvidia and Palantir lead AI surge

WALL Street ended sharply higher on Monday, led by big gains in Nvidia, Palantir and other heavyweight AI-related companies following progress in Washington to end a record government shutdown.

The longest government shutdown in US history could end this week after a compromise that would restore federal funding cleared an initial Senate hurdle late on Sunday, though it was unclear when Congress would give final approval.

“The government shutdown was continuing a lot longer than people had expected. There were concerns around the economy, about flights potentially being canceled and having a wider impact to the economy,” said Chris Zaccarelli, Northlight Asset Management’s chief investment officer.

Heavyweight tech stocks rebounded from some recent losses. Last week, the S&P 500 technology sector index tumbled 4.2 per cent. Nvidia, the world’s most valuable company, rose 5.8 per cent. AI data analytics firm Palantir jumped 8.8 per cent and Tesla climbed 3.7 per cent.

“This is a rebound after being slightly oversold last week. It’s another example of the “buy the dip” mantra really acting quickly in the tech and AI space,” said Ross Mayfield, investment strategy analyst at Baird in Louisville, Kentucky.

“There is nothing structural hitting the AI theme. In fact, a lot of earnings reports have been really strong in that sector.”

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The S&P 500 climbed 1.54 per cent to end the session at 6,832.43 points.

The Nasdaq gained 2.27 per cent to 23,527.17 points, its biggest one-day percentage gain since May 27.

The Dow Jones Industrial Average rose 0.81 per cent to 47,368.63 points.

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The small-cap Russell 2000 gained 0.9 per cent, while the PHLX semiconductor index jumped 3 per cent.

Volume on US exchanges was relatively light, with 17.9 billion shares traded, compared with an average of 20.8 billion shares over the previous 20 sessions.

Airlines came under pressure as government-directed flight cuts and air traffic staffing absences disrupted US air travel. United Airlines dipped 1.3 per cent and American Airlines fell 2.5 per cent.

On betting website Polymarket, the probability of an end to the shutdown this week stood at 88 per cent.

The longest federal shutdown in history has created a data gap for the Federal Reserve and markets alike, leaving them dependent on private data that has given a mixed picture of the economy.

Some Fed officials reiterated their caution regarding the monetary policy decision at the central bank’s next meeting, while Fed Governor Stephen Miran repeated his call for a big rate cut.

Optimism around artificial intelligence has fueled a bull run in US stocks this year, but concerns around monetization and circular spending within the sector drove a bout of selling recently. The Nasdaq last week marked its worst performance in over seven months.

Meanwhile, third-quarter earnings season is nearly complete. Of the 446 S&P 500 companies that have reported, 83 per cent have delivered better-than-expected earnings, according to data compiled by LSEG.

Shares of health insurers dropped after the US Senate struck a deal to end the 40-day federal shutdown without extending Affordable Care Act subsidies, setting up a December vote on the issue instead. Centene dropped 8.8 per cent, Humana fell 5.4 per cent and Elevance Health declined 4.4 per cent.

Metsera slumped 14.8 per cent after Pfizer won a US$10 billion bidding war to acquire the company. Eli Lilly rose 4.6 per cent to a record high after Leerink Partners upgraded its rating on the stock.

Advancing issues outnumbered declining ones within the S&P 500 by a 1.7-to-one ratio.

The S&P 500 posted 32 new highs and 8 new lows; the Nasdaq recorded 106 new highs and 128 new lows. AFP