US equities ditch shutdown concerns to close at record hi

US equities continued to advance despite the onset of the federal government shutdown, with all three major indices recording fresh record highs. The S&P 500 rose 0.3% to close above 6,700 for the first time, while the Dow Jones Industrial Average gained 0.1% to 46,441.1 and the Nasdaq Composite climbed 0.4% to 22,755.2. The rally marked the fourth consecutive session of gains, although most sectors ended in negative territory, led by materials, while health care shares saw the strongest advance. Market resilience suggests that investors were willing to look past the political turbulence, aided by optimism surrounding corporate activity and strength in select sectors such as pharmaceuticals, where companies including Pfizer, Eli Lilly, and Amgen posted notable gains.

The main drivers influencing sentiment were a mix of corporate and macroeconomic factors. Mergers and acquisitions news, such as BlackRock’s Global Infrastructure Partners nearing a $38 billion takeover of AES, alongside positive earnings from companies like Conagra Brands, provided support to the broader market. At the same time, economic uncertainty was underscored by weaker-than-expected ADP employment data, signalling softer labour market conditions, while the ongoing government shutdown raised concerns about delays in key official economic releases. Falling US Treasury yields reflected expectations for additional interest rate cuts, as investors digested the prospect of slowing growth and reduced inflation pressures. Against this backdrop, while equity performance has been robust, heightened volatility remains a risk in the near term given both the political environment and fragile economic signals.

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Asian equities advanced on Thursday, led by South Korea’s KOSPI hitting a record high as chipmakers SK Hynix and Samsung surged on an AI deal with OpenAI. Broader regional tech strength lifted Hong Kong and Japan, while Australia’s ASX 200 gained on miner optimism after reports of potential US investment in critical mineral firms.

US equity futures remained steady overnight after the S&P 500 hit new record highs, with investors brushing aside the government shutdown and weak jobs data. The S&P 500, Dow, and Nasdaq all posted gains on Wednesday, while pharmaceutical shares extended strength in after-hours trade following Pfizer’s pricing deal with the Trump administration.

European equities climbed to record highs, with the STOXX 50 closing at 5,589. Markets were supported by gains across multiple sectors, led healthcare where share of Sanofi, Roche, Novo Nordisk and Bayer all registered significant gains. Investors also digested Eurozone inflation data and weaker US private-sector jobs, boosting confidence in further Federal Reserve rate cuts.

The US dollar steadied early morning, recovering after four sessions of losses, with its index edging up 0.1% to 97.80. Support came as concerns over Federal Reserve independence eased and focus shifted to the government shutdown’s impact on data. Against the euro, the dollar firmed slightly, with the single currency down 0.04% at $1.1725.

Oil prices edged higher in Asian trade after sliding to four-month lows, with Brent at $65.67 and WTI at $62.09. Gains followed sharp losses fuelled by rising US crude inventories, weak demand signals, and fears of oversupply as OPEC+ considers further output hikes. The ongoing US government shutdown also added to market uncertainty.

US private payrolls fell 32,000 in September, the largest decline in over two years, missing forecasts of a 45,000 gain, with August revised down to a 3,000 loss. The report, amid a government shutdown delaying official data, has led markets to price in two additional Fed rate cuts this year, as hiring slows but layoffs remain low.

Fitch said the ongoing U.S. government shutdown will not immediately affect its sovereign rating, though the economic impact depends on its length and scope. It expects deficits to narrow, supported by rising tariff revenues, while the dollar’s reserve status remains strong. Shutdowns disrupt services but usually cause limited, recoverable economic harm.

Equities on the move

The following companies experienced moves in their share price driven by analyst ratings, quarterly earnings, or other news:

The US government is exploring equity and funding support for Australian critical minerals firms to reduce reliance on China. Financing may include debt, equity, or offtake agreements, focusing on projects ready by 2027. The initiative has boosted investor interest in lithium, cobalt, and rare earths vital for clean energy, semiconductors, and defence.

Intel shares climbed nearly 6% after Semafor reported the company is in early talks to produce chips for AMD, which currently relies on Taiwan’s TSMC. Any deal could face hurdles, as Intel lacks the technology for AMD’s most advanced products. The scope, timing, and investment structure of a potential agreement remain uncertain.

Reddit shares dropped over 10% after reports showed fewer daily users and a big fall in how often ChatGPT cited the platform, down from 29.2% to 5.3% since September 10. Analyst Brad Erickson said Google’s indexing changes may have caused part of the drop but remains hopeful about Reddit’s future ad revenue potential.

Samsung Electronics and SK Hynix signed agreements to supply memory chips to OpenAI for its Stargate project and to build two data centres in South Korea. The partnership aims to leverage South Korea’s AI hub ambitions, with Samsung SDS, Samsung Heavy Industries, and Samsung C&T also supporting AI infrastructure, including floating offshore data centres.

Apple has paused its Vision Pro headset overhaul to prioritise development of smart glasses aimed at competing with Meta. The company is accelerating work on two models: a lightweight iPhone-paired version for 2027 and a display-equipped version for 2028. The shift responds to weak Vision Pro sales and growing competition from Meta’s Quest and Ray-Ban Display.

Meta Platforms will use interactions with its generative AI tools to personalise content and ads across Facebook and Instagram from December 16, with notifications from October 7 and no opt-out option for users. Sensitive topics will be excluded. The rollout excludes the UK, EU and South Korea, leveraging Meta AI’s 1 billion monthly active users.

Microsoft is launching a new Microsoft 365 Premium tier for $19.99 per month, combining Office apps with AI tools like a chatbot and image generation. Current Copilot Pro users will move to this tier, which removes previous limits and lets subscribers use AI features for work, including editing documents and managing emails.

BlackRock-owned Global Infrastructure Partners is in advanced talks to acquire US utility group AES in a deal potentially exceeding $40 billion. AES shares jumped 16.8% on the news. The company’s growth in renewables and rising power demand from AI and data centres has attracted investor interest, though a final agreement is not guaranteed.

Peloton introduced updated equipment and Peloton IQ, an AI coaching system that gives personalised workout feedback. The upgrades include the Bike, Tread, Row+, and Pro Series, with higher prices. Analysts say the improved experience, AI features, and wider distribution could help boost revenue, keep users engaged, and reduce long-term cancellations.

Renault and China’s Chery Automobile are in discussions over a potential partnership to produce and sell vehicles in South America. Chery could use Renault’s factories in Colombia and Argentina, with Renault providing distribution and design support. The talks, initiated under former CEO Luca de Meo, remain ongoing and may not lead to a deal.

Brunello Cucinelli reported a 12% rise in third-quarter revenues to €336m and reaffirmed compliance with EU rules on its limited Russian operations, following short-seller allegations it misled investors. Russian sales, now just 1.4% of revenue, are declining as pre-war stock runs down. The group confirmed 2025–26 growth targets of around 10%.

Continental AG expects a high double-digit million-euro impact from U.S. tariffs in H2 2025, already accounting for a retroactive cut to 15% from August. The German automotive supplier said winter order books looked promising, third-quarter tyre sales should remain stable, and the division’s adjusted operating profit margin is forecast at 12.5%–14.0% for 2025.

Dutch pension fund ABP has sold its entire stake in Caterpillar, citing its new sustainability policy focused on socially responsible investments. The divestment is linked to Caterpillar’s business with Israel, where the company supplies bulldozers used in demolitions in Palestinian territories, raising concerns over potential human rights violations highlighted by the United Nations.

Seaport Research Partners initiated Apple with a Buy rating and $310 target, highlighting strong pricing power, services growth, and an upcoming product upgrade cycle. Analyst Jay Goldberg noted risks from reliance on China and an unsettled AI strategy, while success in AI could drive a “super cycle” of upgrades, supporting Apple’s ecosystem and long-term revenue potential.

William Blair views Tesla’s share valuation at 118x 2026 EBITDA as limiting upside, despite raising Q3 delivery estimates to 480,000 on strong U.S. and China demand. The firm maintained a Market Perform rating, highlighting risks from Chinese competition, Elon Musk’s influence, and uncertainty around robotaxi and energy storage prospects.

CFRA upgraded Spotify to Buy after CEO Daniel Ek stepped down to Executive Chairman, with Gaustav Soderstrom and Alex Norstrom named co-CEOs. The brokerage sees limited disruption, maintains a $790 target, and expects continued revenue and earnings growth despite media concerns over Ek’s outside investments.

Jefferies upgraded United Airlines to Buy, highlighting strong advance bookings, favourable hub dynamics, and delayed cost pressures from the flight attendants’ union deal. The airline is expected to see revenue and margin growth, with total revenue per available seat mile improving in Q4 and margins projected to rise from 8% in 2025 to around 10% by 2028.

RBC Capital Markets downgraded GE Vernova to Sector Perform, citing limited upside as the market prices in long-term earnings. While power and electrification support margins, slower revenue growth, softer wind demand, and delayed service contract impacts temper prospects, leaving the equity’s valuation already reflecting most of its potential.

Jefferies upgraded Carvana to Buy, citing its potential to capture a larger share of the $800 billion US used-car market as consumers shift online. With improving production, delivery speeds, and reconditioning facilities, Carvana could grow from 2% to 10% market share by 2035. Cost efficiencies are expected to boost per-unit earnings significantly.

BTIG initiated coverage of Coinbase with a Buy rating and $410 target, citing its shift from reliance on trading fees to subscription and services, now 40% of revenue. Growth drivers include derivatives via Deribit, stablecoins like USDC, and the Base developer platform, positioning Coinbase as a bridge between traditional finance and blockchain systems.

HSBC has upgraded Autodesk to Buy from Hold, raising its price target to $388, citing strong AI adoption and favourable capital expenditure trends. The bank highlighted AI integration across core tools, a large data moat, and robust AEC segment growth, expecting a CY24-27e non-GAAP EPS CAGR of 16.7% and 20.5% potential upside.

Evercore ISI upgraded Samsara to Outperform with a $50 target, citing strong growth from product expansion, AI innovation, and attractive valuation. Analysts highlighted low market penetration, cross-sell opportunities, and 20%+ revenue growth potential, noting the Connected Platform strategy and international expansion could further boost growth and operating leverage.

Citi Research raised its outlook for Schneider Electric, citing strength in datacentre operations and a recovery in industrial and building markets. Organic sales growth is now expected to reach around 10% in 2026. The brokerage added the equity to a positive 90-day Catalyst Watch and raised its target price to €280, maintaining a Buy rating.

Deutsche Bank initiated coverage of Theon International and Exosens, citing growth in Europe’s night vision market. Theon received a Buy rating, Exosens a Hold. Both, holding leading market shares, are expected to achieve 13–15% organic revenue growth, supported by production constraints and US export restrictions.

Upcoming data and events

Key economic releases for today include the eurozone August unemployment rate from Eurostat and several US reports including September Challenger Job Cuts YoY, weekly Initial Jobless Claims, September Durable Goods Orders and August Factory Orders, while in terms of earnings, the most prominent release is Tesco.