Stock market today: S&P 500, Nasdaq futures rise as AI optimism blots out US shutdown

US stocks were mixed Thursday, with an early rally driven by OpenAI's $500 billion valuation and record highs for AI chipmakers like Nvidia fading as investors weighed a prolonged US government shutdown. The shutdown is expected to delay key economic data and prompted warnings of GDP impact, while private labor market indicators reinforced expectations for Fed interest rate cuts. Meanwhile, FICO shares surged nearly 19% after announcing direct sales of credit scores to mortgage lenders, significantly impacting credit bureau stocks.

Analysis

The market is exhibiting a significant divergence, with AI-related enthusiasm clashing with macroeconomic and political headwinds. A rally driven by OpenAI achieving a $500 billion valuation propelled semiconductor stocks, with Nvidia (NVDA) hitting a record high and peers like AMD and Broadcom also gaining. This optimism, however, was tempered by concerns over a protracted US government shutdown, which threatens to negatively impact GDP and is delaying key economic data, including the September jobs report. In the absence of official figures, private data from Challenger, Gray & Christmas points to a softening labor market with hiring plans at their lowest since 2009, reinforcing investor bets for a Federal Reserve rate cut in October. On a micro level, Fair Isaac (FICO) shares surged nearly 19% after announcing it would sell credit scores directly to lenders, causing a sharp sell-off in credit bureaus like Equifax (EFX) and TransUnion (TRU), which both fell over 12%. Meanwhile, pre-earnings analyst commentary suggests caution for consumer names like Chipotle (CMG) and PepsiCo (PEP) due to macro pressures, contrasting with a bullish outlook for Alibaba (BABA) driven by its cloud division's performance.

Key Decisions for Investors

• Investors should assess exposure to the AI value chain, particularly semiconductors like NVDA, but remain aware that the initial rally fizzled, suggesting that macroeconomic concerns like the government shutdown are capping market-wide enthusiasm.
• The disruptive announcement from FICO, causing its stock to surge while EFX and TRU plummeted, highlights a structural shift in the credit scoring industry and presents a potential pairs trade or a reason to re-evaluate holdings in credit bureaus.
• With official economic data delayed, pay close attention to private labor market reports, as their indication of a softening economy is solidifying expectations for a Fed rate cut, which could benefit rate-sensitive sectors.
• Consider reviewing positions in consumer-discretionary and staples stocks such as CMG and PEP, as analyst notes flag potential earnings weakness, and contrast this with specific growth stories like BABA, which is seeing positive revisions.