S&P 500 Extends Winning Streak Amid AI Optimism and Economic Uncertainty
Wall Street ended the week on a cautious note, with the S&P 500 eking out a fractional gain. This extends its longest winning streak since July, despite concerns about a weakening economy and a potential US government shutdown. President Trump weighed in, warning Hamas and agreeing to a plan to end the war in Gaza by Sunday.
The day's trading was marked by a tug-of-war between optimism over AI developments and worries about economic slowdown. AI optimism was initially sparked by a series of big-ticket deals and partnerships. UiPath announced a new partnership with OpenAI to integrate OpenAI models directly into UiPath Workflows. NVIDIA also revealed a strategic partnership with OpenAI, pledging at least 10 Gigawatt of NVIDIA systems and up to 100 billion USD in OpenAI's AI infrastructure.
However, these gains were tempered by economic indicators pointing to sluggish hiring, limited layoffs, modest pay gains, and easing demand for workers in September. The US service sector also stalled, with business activity shrinking for the first time since the pandemic. The dollar slumped, posting its worst week since August, and the yield on the 10-year Treasury fell more than five basis points.
The Nasdaq 100 fell 0.4%, with Palantir Technologies Inc. among the biggest decliners. Despite Friday's pause, investors remain optimistic that AI spending will eventually translate into profits and extend gains in tech shares.
The week ended with the S&P 500 extending its winning streak, but economic uncertainties and geopolitical tensions cast a shadow over the market. As the deadline for a US government shutdown looms and the situation in Gaza remains uncertain, investors will be watching these developments closely in the coming days.
