An AI and “Everything Else” Marketplace Emerges in the US

Wednesday’s market action presented a stark contrast, highlighting a growing schism within the U.S. equity landscape. The divergence between the Dow Jones Industrial Average and the Nasdaq Composite suggests a bifurcated market: one driven by the relentless momentum of artificial intelligence and another reflecting the broader economic realities.

The Dow, a bellwether for established industries, not only advanced but also secured its second consecutive record high, closing above the 48,000 mark for the first time. This milestone underscores the resilience and potential of the “old economy,” encompassing companies in sectors like banking, healthcare, and industrials that form the backbone of U.S. commerce.

Specifically, gains in stocks such as Goldman Sachs, Eli Lilly, and Caterpillar propelled the Dow upwards, demonstrating that traditional stalwarts can still deliver substantial returns. This surge reflects investor confidence in the stability and consistent performance of these established businesses, particularly amid concerns about future economic uncertainty.

While tech giants like Nvidia and Salesforce also hold positions within the Dow, their influence is moderated by the index’s price-weighted structure, which gives greater sway to companies with higher share prices. Consequently, the Dow’s overall performance is less susceptible to the volatile swings often seen in the technology sector.

Conversely, the Nasdaq, heavily weighted towards technology companies by market capitalization, experienced a downturn. Declines in shares of Oracle and Palantir offset even Advanced Micro Devices’ impressive 9% surge following projections for significant growth. This tech-heavy index reflects the market’s sensitivity to specific performance metrics within the tech sector, indicating a more discerning approach to AI investments.

Market analysts suggest that while a pullback in certain tech stocks might signal a brief pause in the AI frenzy, it should not be interpreted as a widespread alarm: “There’s nothing wrong, in our view, of kind of trimming back, taking some gains and re-diversifying across other spots in the equity markets,” said Josh Chastant, portfolio manager of public investments at GuideStone Fund.

Ideally, investors hope to see these two paths converge, signaling a more balanced and sustainable market trajectory. Such convergence would indicate a broader distribution of investment and reduce the risks associated with over-reliance on a single sector.

The Dow Jones Industrial Average notches record. The 30-stock index climbed 0.68% Wednesday stateside to close above 48,000 for the first time. The S&P 500 was mostly flat and the Nasdaq Composite fell 0.26%. The pan-European Stoxx 600 gained 0.71%.

Anthropic to spend $50 billion on U.S. AI infrastructure. Custom data centers will be first built in Texas and New York and go live in 2026, with more locations to follow. The facilities will be developed with Fluidstack, an AI cloud platform. This substantial investment signals a robust commitment to expanding domestic AI capabilities, potentially reshaping the competitive landscape in AI infrastructure and cloud services. The move also has significant implications for regional economies, promising job creation and technological innovation.

U.S. October jobs and inflation data might not be released. White House press secretary Karoline Leavitt told reporters that part of the fallout of the government closure could be lasting damage to the government’s data collection ability. But analysts think otherwise. The potential absence of this essential economic data introduces a layer of uncertainty into market forecasts, potentially increasing volatility and impacting investment strategies.

U.S. House of Representatives heading toward a vote. The House on Wednesday night stateside cleared a procedural hurdle required before the vote could begin on a bill that would end the government shutdown. Voting is expected to happen as of publication time.

[PRO] This U.S. mining stock is a top play: CIO. U.K. fund Blue Whale Capital’s Stephen Yiu said macroeconomic concerns, such as the U.S. fiscal deficit and the weakness of the dollar, could support the stock. This perspective emphasizes the strategic importance of commodities and raw materials amid global macroeconomic shifts.

Why private equity is stuck with ‘zombie companies’ it can’t sell

Private equity firms are grappling with a growing portfolio of underperforming assets, often referred to as “zombie companies,” which are neither thriving nor failing outright. These businesses struggle to generate adequate cash flow to service debt and are unable to attract potential buyers, even at reduced valuations. Trapped on fund balance sheets beyond their expected investment timelines, these “zombie companies” represent a significant challenge for private equity, requiring difficult choices about restructuring, further investment, or eventual liquidation.

— Lee Ying Shan