New York Stocks Rebound, Overcoming Previous Day's Decline on AI Optimism

"Renewed optimism about AI outweighed bubble concerns"

Pay attention to the Fed's September meeting minutes to be released this afternoon

On the 8th (local time), New York stocks rebounded from the previous day's decline and opened higher. Bloomberg described the session as one in which renewed optimism about AI overwhelmed concerns about bubble formation in some tech stocks.

Extending early gains, as of 10:15 a.m. Eastern Time the S&P 500 index was up 0.4% and the Nasdaq Composite was up 0.7%. The Dow Jones Industrial Average rose 0.1%.

The yield on the 10-year U.S. Treasury fell 2 basis points (1bp=0.01%) to 4.106%. The two-year Treasury yield traded at 3.564%, similar to the previous day.

On the eighth day of the U.S. government shutdown, spot gold continued its advance and was trading at 4,060 dollars per ounce around 10 a.m. ET.

The Bloomberg Dollar Spot Index was little changed and the Japanese yen fell 0.4% to 152.52 per dollar.

NVIDIA, which had declined over the past two days, was trading early in the session up 1.4% at 187 dollars. Appearing on CNBC before the New York open, CEO Jensen Huang denied concerns about an AI investment bubble, saying "AI computing demand has increased significantly over the past six months."

Oracle, whose shares plunged after saying its cloud business profitability was much lower than expected, slightly rebounded 0.5% that day. Yesterday, tech outlet The Information reported that Oracle recorded a gross margin of only 14% from NVIDIA's cloud business in the last quarter. This is far lower than Oracle's overall gross margin in the 70% range this year.

Tesla, whose stock fell 4.5% the previous day after unveiling a mass-market version of the pricier Model Y, was trading around 433 dollars.

Elon Musk's AI company xAI said it is raising 20 billion dollars in funding from investors including NVIDIA, more than initially planned, and the stream of AI-related investment news has all but erased concerns about AI investment.

Bloomberg noted that renewed optimism about AI is outweighing concerns about bubble formation in the well-known tech stocks that have driven the recent rally.

Mark Haffele of UBS Global Wealth Management said, "Today's big tech price-to-earnings ratios are still much lower than those of tech companies at the peak of the dot-com bubble, so the bull market is likely to continue."

Bitcoin was trading up 0.4% at 122,475 dollars and ether was trading down 0.8% at 4,474 dollars.

At 2 p.m. Eastern Time (03:00 KST on the 9th), the Federal Reserve Board's minutes of the September meeting will be released. With major economic data releases suspended due to the government shutdown, the market is watching the minutes for clues about the direction of rate policy for the October and December meetings.

Speeches by Fed officials are also scheduled that day, including St. Louis Fed President Alberto Musalem, Fed Governor Michael Barr, Minneapolis Fed President Neel Kashkari, and Chicago Fed President Austan Goolsbee.

Guest reporter Jeongah Kim kja@hankyung.com