The S&P 500 and Nasdaq indices hit new records amid a boom in AI deals.
The US S&P 500 and Nasdaq stock indices closed higher on Monday, reaching all-time closing highs. Market optimism was supported by news of major AI deals, despite the US federal government shutdown entering its sixth day. Meanwhile, the Dow Jones Industrial Average declined slightly.
Semiconductors were the day’s top performers
Technology stocks were the main driver of growth. AMD shares jumped nearly 24% after announcing an agreement with OpenAI. The chipmaker will supply artificial intelligence solutions in a deal that could generate tens of billions of dollars in revenue. OpenAI will also have the option to acquire up to 10% of AMD’s shares.
The Philadelphia Semiconductor Index rose 2.9%.
“The market is showing strong growth in the tech and consumer segments despite the challenges in Washington,” noted Robert Pavlik, senior portfolio manager at Dakota Wealth. “Investors continue to see artificial intelligence as a source of growth and are willing to support companies operating in this space.”
He added that the hype cannot continue indefinitely: “Every wave has its peak, but it’s impossible to know where we are now.”
Shutdown and the wait for Fed decisions
Due to the government shutdown, the publication of a number of macroeconomic reports has been postponed. This is forcing investors to rely on private and independent data sources when assessing the prospects for interest rate cuts.
According to futures markets, market participants are almost entirely pricing in another 0.25 percentage point Fed rate cut at the end of October.
Policymakers within the Fed are divided: some warn of the risk of accelerating inflation if rates are cut too quickly, while others point to signs of a cooling labor market and believe easing is necessary.
Trading Results and Sector Performance
The S&P 500 rose 0.36% to 6,740.28 points.
- The Nasdaq Composite gained 0.71%, reaching 22,941.67 points.
- The Dow Jones Industrial Average fell slightly by 0.14% to 46,694.97 points.
- The consumer staples sector performed best, while real estate companies posted the biggest declines.
Financial Season and Corporate News
Next week, market participants will turn their attention to quarterly earnings reports from US banks. According to LSEG estimates, the combined profit of S&P 500 companies in the third quarter could rise 8.8% year-over-year.
Tesla gained 5.5% after announcing its event scheduled for Tuesday.
Starbucks fell 5% after analysts at TD Cowen cut their price target, citing weakening consumer sentiment among younger consumers.
Bitcoin surpassed $125,000, supporting crypto stocks Coinbase, MicroStrategy, Riot Platforms, and MARA Holdings.
Comerica shares rose 13.7% after the announcement of its $10.9 billion acquisition by Fifth Third Bank.
Verizon fell 5.1% after former PayPal CEO Dan Schulman was appointed CEO.
General Trading Data
On the New York Stock Exchange, 665 stocks rose, hitting new 52-week highs, while 75 stocks hit new lows. On the Nasdaq, 2,602 stocks rose, compared to 2,062 that declined.
Total trading volume was 19.69 billion shares, slightly above the average of the last 20 trading sessions.
According to the latest forecasts, the US Federal Reserve and leading global central banks plan to continue their course of lowering interest rates until the end of the year, while Europe, on the contrary, is taking a break and temporarily suspending its monetary easing cycle.
