“The market responds to this government shutdown threat in a negative way… Obviously, for some reason, the market’s not engaging this in a negative way at all.” – 01:18
Peter Tuchman, Senior Floor Trader at TradeMas, joins Remy Blaire at the New York Stock Exchange to discuss the current dynamics of the U.S. stock market, which is experiencing notable gains, particularly in the technology sector. The S&P 500 has achieved a historic milestone by closing above 6700 for the first time, driven by a surge in chip stocks, with NVIDIA reaching yet another record high. Additionally, the episode highlights OpenAI’s impressive valuation, which has skyrocketed to $500 billion, surpassing SpaceX to become the world’s most valuable startup.
Historically, government shutdowns have negatively impacted the market, often resulting in significant declines. However, Peter notes that this time, the market appears to be unfazed, continuing its upward trajectory. He attributes this resilience to several factors, including a strong close to the third quarter and a substantial influx of capital into the market, highlighted by a $4.5 billion buy program on the last day of the quarter.
The conversation shifts to the potential long-term effects of the shutdown, with Peter emphasizing that while the market is currently thriving, prolonged shutdowns could significantly impact the economy, potentially affecting GDP growth and the livelihoods of hundreds of thousands of government workers.
As they explore the topic of interest rates, Remy and Peter discuss the rising expectations for rate cuts in October and December. Peter reflects on the Federal Reserve’s cautious approach to cutting rates, noting that historically, when the economy enters an interest rate cutting cycle, the market tends to perform well over the following year. However, he cautions that external factors, such as tariffs and the government shutdown, can also significantly influence market dynamics.