Background on Key Players and Context
On Thursday, Wall Street’s three major indices closed with losses. The end of the longest government shutdown in U.S. history failed to offset reduced bets on the technology sector and uncertainty surrounding the Federal Reserve (Fed).
The Dow Jones Industrial Average, consisting of 30 large company stocks, dropped 1.65% to 47,457.22 points. The S&P 500, which includes the most valuable companies, fell 1.66% to 6,737.49 points. The Nasdaq Composite technology index declined 2.29% to 22,870.36.
Despite the reopening of the U.S. government, indices succumbed to doubts about technology sector valuations. Notably, Nvidia’s stock (-3.56%) fell sharply, and the SOX index dropped 3.72%.
The government reopening will allow for the resumption of official indicator releases, which had been delayed for over a month and fueled uncertainty about the Fed’s upcoming interest rate decisions. However, October’s employment and inflation data may remain unclear, as reported by the White House. According to the FedWatch tool from CME, bets on a rate cut in December have decreased to 52%.
Impact on Key Companies
Jake Dollarhide, CEO of Longbow Asset Management, told Reuters, “The fundamental question is: Is the tariff inflation transitory and specific? Whether it is or not, that’s why some Fed governors are hesitant to cut rates.”
Among individual stocks, Walt Disney (-7.75%) fell significantly after the entertainment giant announced preparations for a potential prolonged dispute with YouTube TV over distribution of its cable channels.
Sector Performance
Only the energy sector avoided losses among the S&P 500’s top 11 sectors. Consumer discretionary (-2.73%) and information technology (-2.37%) led the declines. Within the Dow Jones, Disney topped losses, followed by Goldman Sachs (-3.99%).
Key Questions and Answers
- What caused the decline in Wall Street indices? The end of the longest U.S. government shutdown in history did not offset reduced bets on the technology sector and uncertainty surrounding the Federal Reserve’s future interest rate decisions.
- Which companies experienced significant stock drops? Walt Disney (-7.75%) fell sharply due to preparations for a potential dispute with YouTube TV over cable channel distribution.
- How will the government reopening affect the Fed’s decisions? The reopening will enable the resumption of official indicator releases, but October’s employment and inflation data may remain unclear.
- What are investors’ current views on Fed rate cuts? According to the FedWatch tool from CME, bets on a rate cut in December have decreased to 52%.
