Wall Street cooled off on Tuesday after hitting new record highs yesterday, with investors weighing the fallout of the government shutdown against hopes for AI and strong corporate earnings ahead.
The Dow Jones Industrial Average slipped 0.5% by midday, while the S&P 500 dropped 0.5%. The Nasdaq Composite lost 0.8% after leading markets higher for seven straight sessions. Meanwhile, gold surged above $4,000 an ounce for the first time, underscoring investor demand for safety as Washington gridlock drags on.
Market Movers:
- Gold Futures (GC=F) +0.4%: Gold prices crossed the $4,000 mark for the first time on record, fueled by surging inflows into ETFs backed by the metal. The World Gold Council reported a 23% increase in quarterly inflows, with demand broadening across North America, Europe, and Asia. Safe-haven buying has accelerated amid weakening dollar conditions and the prolonged government shutdown.
- Trilogy Metals (TMQ) +231%: Shares skyrocketed after news that the Trump administration is taking a 10% stake in the company, with warrants to boost that further. An executive order permitting construction of an access road to Alaska’s Ambler Mining District also stoked investor enthusiasm, given the site’s deposits of copper, gold, cobalt, and other strategic metals.
- Tesla (TSLA) -2%: Tesla pulled back after a 5% surge on Monday, as traders awaited clarity on potential new product reveals tied to cryptic social media posts. Speculation about a Model Y update or new feature set has fueled volatility ahead of the company’s November investor event.
- AMD (AMD) +1%: AMD edged higher following yesterday’s blockbuster rally on its multibillion-dollar GPU supply deal with OpenAI. The stock soared nearly 30% Monday, adding more than $100 billion in market value. Analysts say Tuesday’s modest gains suggest momentum is holding even after the historic run-up.
Shutdown Causes Pessimism
The ongoing government shutdown has already delayed the September jobs report and threatens to postpone next week’s inflation data. Without key releases, investors are left without a clear picture of the economy’s health, complicating the Federal Reserve’s path forward on interest rates. Strategists warn that the longer the stalemate continues, the harder it becomes for Wall Street to price risk accurately.
Signs of potential compromise emerged after President Trump indicated he was open to negotiations with Democrats over healthcare subsidies, a central sticking point. Still, lawmakers remain far apart, and markets are showing signs of unease with each passing day of the stoppage.
Safe-Haven Surge Reflects Investor Anxiety
The surge in gold to record highs shows how deeply the shutdown and broader fiscal worries are driving a flight to safety. Alongside the record move in gold, silver, and Bitcoin also remain elevated as traders hedge against potential market turbulence. Analysts are labeling the trade a classic “debasement” play—investors positioning for currency weakness and the long-term erosion of fiat value.
ETF inflows have amplified the move, with global funds adding more than $26 billion in the last quarter, according to the World Gold Council. Trading activity in the metal has also spiked, with September setting a string of all-time highs and record daily volumes.
Earnings Season and AI Optimism
Despite near-term jitters, optimism around AI and upcoming corporate earnings has kept the broader bull market intact. The AMD-OpenAI megadeal injected fresh energy into tech stocks, with strategists raising S&P 500 targets as expectations build for another round of blockbuster reports from Big Tech.
Small-cap names in the Russell 2000 are also seeing improved earnings growth, marking their strongest quarter since 2021, according to Bank of America. The broadening of the earnings recovery beyond megacaps is being watched as a potential catalyst for sustaining the rally.
Looking Ahead
Markets now sit at a crossroads, balancing AI-driven optimism with the realities of a prolonged government shutdown and looming trade policy risks. The absence of critical economic data means investors will lean heavily on corporate earnings and Fed commentary in the coming weeks. Whether the market can extend its record-setting run will depend on progress in Washington and signs that Big Tech’s earnings momentum can justify lofty valuations.