Markets Pause as Shutdown Nears Resolution and Tech Momentum Eases

Global markets entered the week with a cautious tone as optimism over the U.S. government reopening was offset by a decline in technology shares, led by Nvidia. The S&P 500 halted its recent rally, while investors balanced positive macro developments against the latest turbulence in megacap stocks. Despite the temporary setback in equities, broader sentiment remains resilient, supported by signs that the record-breaking U.S. government shutdown is finally approaching its end.

Equities: Tech Weakness Caps Broader Optimism

U.S. equities traded mixed, with the S&P 500 edging lower by 0.1% to around 6,820, pressured by a pullback in major technology names. Nvidia fell 3% after reports that SoftBank Group sold its entire $5.83 billion stake to finance further artificial intelligence investments. CoreWeave dropped 13% after issuing a weaker forecast, reflecting cooling enthusiasm across AI-linked stocks.

While megacaps weighed on the index, market breadth was relatively positive—most S&P 500 components advanced, highlighting underlying resilience outside the tech sector. The Dow Jones Industrial Average rose 0.7%, while the Nasdaq 100 fell 0.6%. The Russell 2000 slipped 0.1%, indicating cautious risk appetite among smaller companies.

U.S. Government Shutdown: Resolution in Sight

Markets found support from growing optimism that the 42-day U.S. government shutdown, the longest in history, is nearing its end. The Senate passed a temporary funding measure supported by centrist Democrats, keeping most of the government funded through January 30 and several agencies through September 30. The House of Representatives is expected to pass the bill swiftly when it reconvenes on Wednesday, with President Donald Trump already backing the legislation.

The resolution comes after weeks of halted economic data releases and mounting disruptions—from delayed food assistance to widespread travel cancellations. Once the government reopens, official data flow is expected to resume, starting potentially with the delayed September jobs report as early as next week. The return of data is likely to restore clarity for traders assessing the Federal Reserve’s next policy moves.

Corporate Highlights

• Microsoft announced a $10 billion investment in an AI data center along the Portuguese coast, marking one of its largest European commitments this year.
• Alphabet’s Google unveiled plans to invest €5.5 billion ($6.4 billion) in Germany over the next four years to expand its computing infrastructure.
• Meta Platforms faced increased regulatory scrutiny in Europe, with WhatsApp now subject to stricter content moderation rules.
• Nebius Group NV, a neocloud provider, reported a 300% surge in Q3 sales and signed a major AI infrastructure deal with Meta.
• LVMH plans new store openings in China amid signs of a luxury demand rebound.
• Parker-Hannifin Corp. agreed to buy Filtration Group for $9.25 billion, strengthening its industrial filtration business.
• Paramount Skydance Corp. rallied after announcing deeper cost-cutting targets.
• Gemini Space Station, a crypto exchange, reported a wider-than-expected loss in its first post-IPO results.
• ArcelorMittal SA ended exclusive talks with South Africa’s development-finance institution and is now seeking new investors for its local steel operations.

Macro and Market Sentiment

Even with the shutdown dragging into its sixth week, corporate sentiment remains notably upbeat. Mentions of “economic slowdown” in earnings calls have fallen to their lowest levels since 2007, showing business confidence despite policy uncertainty. The combination of strong corporate profits, ongoing AI-driven investments, and expectations of Federal Reserve rate cuts continues to underpin bullish sentiment for year-end.

Historically, the S&P 500 has advanced an average of 2.3% in the month following the end of a U.S. government shutdown, suggesting potential for renewed upward momentum once Washington reopens. Traders are maintaining a constructive bias, anticipating a continuation of the year-end rally as liquidity and data flow return to normal.

Sector Focus: AI and Tech Valuations

The AI investment cycle remains at the heart of market dynamics. While investors continue to pour capital into data centers, semiconductors, and hyperscalers, there is growing debate about sustainability. Large tech firms such as OpenAI, Meta, and Microsoft continue to allocate billions toward AI infrastructure, yet the rapid pace of spending has raised concerns over potential overvaluation.

Attention now turns to Nvidia’s upcoming earnings report on November 19, widely viewed as a key test for market sentiment. With the company’s stock central to the AI trade, any earnings disappointment could have broad ripple effects across the technology sector.

Global Markets Overview

• Currencies: The U.S. dollar weakened slightly, with the euro up 0.3% to $1.1595. The Japanese yen and British pound traded steady at ¥154.04 and $1.3173, respectively.

• Bonds: U.S. Treasuries were closed for Veterans Day, but futures climbed, reflecting expectations of slower economic growth. Germany’s 10-year yield fell to 2.66%, while UK gilts dropped to 4.39%.

• Commodities: WTI crude advanced 1.7% to $61.17 per barrel, supported by improving demand prospects, while gold was little changed.

• Cryptocurrencies: Bitcoin slipped 1.9% to $103,571, and Ether declined 1.3% to $3,493, as risk appetite cooled.

Outlook

With the government expected to reopen this week and economic data flow resuming, focus will shift toward the Federal Reserve’s policy path and Nvidia’s earnings release. Investors remain cautiously optimistic, expecting that restored fiscal operations and easing inflation will sustain the equity rally into year-end. However, stretched valuations in AI-driven sectors and lingering policy uncertainty could introduce short-term volatility.

In the near term, risk sentiment hinges on two catalysts: confirmation of the U.S. shutdown’s end and whether tech earnings can validate the market’s lofty expectations.

Prepared by Nour Hammoury, Chief Market Analyst at SquaredFinancial
Nour is an investor, independent market strategist, and financial advisor. He holds a BA in Finance and Banking Science from Al-Ahliyya Amman University and a CFTe in Economics from the International Federation of Technical Analysts. He has more than 15 years of experience in forex, stocks, and global economic developments, as well as central bank policies and intermarket analysis. He appears regularly on major international TV networks, such as BBC, Al-Jazeera, Al Hurra, CNBC, and Bloomberg, holding open discussions and sharing insights and readings of the markets and trends.

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