S&P 500, Nasdaq rise as investors focus on AMD-OpenAI deal

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By Niket Nishant and Sukriti Gupta

(Reuters) – The S&P 500 and the Nasdaq rose on Monday, building on last week’s gains, as AMD’s chip-supply deal with OpenAI highlighted the extent of investor enthusiasm around AI and offset concerns around a prolonged federal government shutdown.

The equities rally has persisted despite cautious forecasts and warnings about elevated valuations, especially in tech.

“The dollar amounts around these partnerships and around the buildout of the infrastructure to support AI are getting to be really astounding,” said Leah Bennett, chief investment strategist at Concurrent Asset Management.

AMD became the latest catalyst when the chip designer’s shares soared to a more than one-year high following the OpenAI deal. The stock was last up 26.6% and the top performer on the benchmark index.

Some chip companies rose, with Marvell Technology and Micron Technology gaining 4.2% and 5.5%, respectively. AI server maker Super Micro Computer was up 6.3%.

AI-linked firms advanced: Palantir Technologies jumped 5%, while Oracle gained 2.3%.

A broader semiconductor index hit a record high, last up 3.8%, while AMD rival Nvidia declined nearly 1%.

At 09:59 a.m. ET, the Dow Jones Industrial Average fell 218.34 points, or 0.47%, to 46,540.49, the S&P 500 gained 8.59 points, or 0.13%, to 6,724.38 and the Nasdaq Composite gained 85.46 points, or 0.38%, to 22,865.97.

The S&P 500 tech sector advanced 0.6%. Communication services shares fell 0.47%, dragged by losses in Meta Platforms, down 1.9%.

Declines in stocks such as Home Depot and McDonald’s weighed on the Dow.

While the standoff in Washington has delayed the release of the closely watched nonfarm payrolls report, a slew of alternative indicators last week pointed to tepid hiring, reinforcing expectations that the Federal Reserve will cut rates by 25 bps at its next meeting.

Goldman Sachs expects the military pay date on October 15 to pressure lawmakers into ending their deadlock. If the shutdown stretches beyond that date, roughly 1.3 million uniformed military personnel would go unpaid, the brokerage said.

However, even if a deal is reached, the timeline for releasing delayed data remains uncertain, increasing the likelihood that the Fed will be operating with limited visibility into the economy at its upcoming meeting.

Analysts say that makes the third-quarter earnings season kicking off next week the true test of the rally. By the end of October, 68% of companies representing 72% of market cap will have reported, according to Goldman.

“While the government shutdown is the focus now, earnings and the Fed will soon take center stage. For as much noise as there is, these fundamentals are key catalysts for investors,” said Bret Kenwell, U.S. investment analyst at eToro.

Among stocks, Tesla gained 2% after the electric vehicle-maker teased an event scheduled for Tuesday on social media platform X over the weekend.

Comerica gained 13.9% after Fifth Third said it will buy the company in an all-stock deal valued at $10.9 billion. Shares in Fifth Third declined 1.5%.

Crypto stocks gained with bitcoin near all-time highs. Coinbase Global rose 1%, Riot Platforms jumped 4.9% while MARA Holdings climbed 3.7%.

Declining issues outnumbered advancers by a 1.01-to-1 ratio on the NYSE, while on the Nasdaq advancing issues outnumbered decliners by a 1.24-to-1 ratio.

The S&P 500 posted 28 new 52-week highs and six new lows while the Nasdaq Composite recorded 121 new highs and 27 new lows.

(Reporting by Niket Nishant and Sukriti Gupta in Bengaluru; Editing by Devika Syamnath)