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The S&P 500 rose on Wednesday, a day after it snapped a seven-day win streak because of a drop in Oracle that called to question the sustainability of the artificial intelligence trade. The U.S. government shutdown is also in its second week.
The benchmark index climbed 0.6%, supported by a rise in the index’s information technology and utilities sectors. Both sectors are on pace to score fresh closing highs. The Nasdaq Composite advanced 0.8%. The Dow Jones Industrial Average gained 194 points, or 0.4%.
Nvidia shares rose more than 1% after CEO Jensen Huang said that demand has risen in recent months, telling CNBC that “this year, particularly the last six months, demand of computing has gone up substantially.” Huang also said that he regrets not investing more money into Elon Musk’s artificial intelligence startup, xAI, and that he’s “super excited about the financing opportunity they’re doing.”
“We know some of the things AI can do. We can all be impressed with some of the capabilities, but at the end of the day, there needs to be demand for the chips, demand for whatever the software layer that’s built on top of all that compute looks like,” Baird investment strategist Ross Mayfield said to CNBC. “The demand still being there – and Nvidia is obviously in the best position in the world to comment on that – I do think is reassuring that the level of spending capex isn’t completely circular.”
The move comes just a day after the AI chip darling finished lower in sympathy with Oracle shares in the wake of Oracle reportedly seeing lighter margins in its cloud business than analysts are currently forecasting and that the enterprise software company is losing money on some of its deals to rent out Nvidia’s chips.
That added to fears that the stock market is currently caught up in an AI bubble that harkens back to the late 1990s, when a feeding frenzy on early internet companies eventually led to the bursting of the dot-com bubble. Many market observers are urging investors to rebalance their portfolios, while also acknowledging there could be further upside before the AI rally exhausts itself.
“Even if you look at the late-’90s, we had big corrections in the Nasdaq every single year, so I think there’s going to continue to be this enthusiasm for a sell-off in tech stocks,” Mayfield said. “There could be several corrections, big corrections in tech stocks, you know DeepSeek-type moments, before we ultimately get to some sort of bull market top. I just don’t really feel that we’re close there.”
Meanwhile, the current government shutdown dragged into its eighth day Wednesday, with the Senate expected to vote once again later in the day to reopen the government. The chamber for the fifth time failed to pass a short-term funding bill Monday.
The stoppage has weighed little on equities thus far, but poses a greater risk to sentiment the longer it wears on given the potential hits to the U.S. economy. President Donald Trump has suggested that not all federal workers who have been furloughed will receive back pay, saying Tuesday that “it depends on who we’re talking about.” Active-duty military members might also miss a paycheck scheduled for Oct. 15.
Wall Street will also be awaiting the latest Federal Reserve minutes on Wednesday, which could give investors insight into the makeup of the Fed following a highly divisive September meeting.