US stocks ended a three-week winning streak as technology shares declined amid valuation concerns and scrutiny of AI spending. The Nasdaq led losses, while the Russell 1000 Growth Index trailed its value counterpart by 288 basis points – the widest margin since February. The record-long federal government shutdown dampened sentiment, with the FAA reducing flight schedules and worries mounting over missing data and potential GDP drag. ADP reported 42,000 new private jobs in October, while Challenger, Gray & Christmas cited 1.1mn job cuts YTD, the most since 2003. ISM data showed services activity expanding (52.4) but manufacturing contracting for an eighth month (48.7). Consumer sentiment fell to 50.3, the lowest since 2022, with inflation expectations at 4.7%.
The US Senate voted 60-40 to advance a bipartisan deal to end the record 40-day shutdown, funding agencies through Jan. 30 and restoring pay for furloughed workers. The House must still approve it. The shutdown, costing about US$15bn weekly and cutting GDP growth by 1.5 points, also halted key data releases. Markets rose, with S&P 500 futures up 0.7% and Nasdaq 100 up 1.1%. The bill omits Obamacare subsidy extensions, a key Democratic demand.
European equities declined, with the STOXX Europe 600 down 1.24% on renewed AI overvaluation concerns. Germany’s DAX fell 1.62%, France’s CAC 40 dropped 2.10%, Italy’s FTSE MIB lost 0.60%, and the UK’s FTSE 100 dipped 0.36%, as sentiment weakened amid soft global demand and cautious corporate guidance.
