[New York Stock Market Briefing] Record-low consumer sentiment · shutdown compromise… mixed amid tangled factors

Investor sentiment shrinks amid AI bubble talk and worsening consumer sentiment

Nasdaq fell as much as 2.13% at one point

Losses pared in the afternoon on budget compromise proposal

The three major New York stock indexes closed mixed.

While 'artificial intelligence (AI) bubble' talk continued to act as a source of unease, record-low consumer sentiment triggered early-session sell-offs. However, in the afternoon the Democrats' proposal of a compromise on a temporary budget bill reclaimed much of the losses. This highlighted expectations that the U.S. federal government's shutdown would be lifted.

On the 7th (local time) at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 46,987.1, up 74.8 points (0.16%) from the previous close. The S&P 500 index rose 8.48 points (0.13%) to 6,728.80, while the Nasdaq Composite Index fell 49.46 points (0.21%) to 23,004.54.

Again, the New York market displayed high volatility.

Concerns spread after controversy that OpenAI was seeking government guarantees for infrastructure capital expenditures. There is suspicion that if OpenAI had no cash flow problems, it would not even have mentioned government guarantees.

The Philadelphia Semiconductor Index, composed of AI and semiconductor-related stocks, widened losses to as much as 4.7% intraday. NVIDIA, the darling of the AI industry, fell as much as -4.88%, and Broadcom expanded losses to -5.15%.

The tech-heavy Nasdaq index also was not spared the sharp decline. It dropped as much as -2.13% intraday, and except for Apple, which was trading slightly firm, the mega tech companies with market capitalizations over $1 trillion were all down.

Weaker consumer sentiment also put downward pressure on the stock indexes.

According to the University of Michigan, the preliminary consumer sentiment index for November was 50.3.

It fell 3.3 points from October's 53.6, marking the lowest level since June 2022's 50. A level of 50 is the historical low, suggesting the November reading is near a historic trough.

However, in the afternoon, news that the Democrats proposed a temporary budget compromise to the Republicans quickly reduced the declines, and the S&P 500 and the Dow ultimately turned positive.

The Democrats proposed extending the Obamacare (ACA) subsidies, a key issue in the temporary budget, for only one year and setting up a committee to discuss long-term reforms later. The Republicans rejected the proposal, briefly denting sentiment, but the market clearly moved upward.

The calculation is that with the Democrats winning all in the midterm elections and with the year-end shopping season approaching, the Republicans would find it difficult to drag their feet.

A White House official was reported to have said the government would first be kept open and then the issue would be discussed with the Democrats.

Shin Min-kyung, Hankyung.com reporter radio@hankyung.com