US stocks closed at a record Monday, powered by technology shares as investors disregard the government shutdown, now in its sixth day, and instead cheer a multibillion-dollar infrastructure deal that signalled the artificial intelligence spending boom.
The S&P 500 Index rose 0.4% to notch its seventh straight session of gains for its longest winning streak since early May. The Nasdaq 100 Index advanced 0.8%, with Advanced Micro Devices Inc soaring 24% — its biggest gain since April 9 — after inking a deal with OpenAI to roll out AI infrastructure in a pact the chipmaker said could generate tens of billions of dollars in new revenue. Nvidia Corp, AMD’s main competitor in graphics processors, was the largest S&P 500 point decliner, falling 1.1% following that announcement.
Among individual stock movers, AppLovin dropped 14% for its largest decline since April 4 after Bloomberg News reported the Securities and Exchange Commission has been probing the data-collection practices of the mobile advertising tech company. Comerica Inc. rallied 14%, its best day since May 2023, after Fifth Third Bancorp agreed to buy the bank for about US$10.9 billion in stock, marking the largest US bank deal this year. Fifth Third’s stock fell 1.4%. And Tesla Inc jumped about 5.5% after teasing a product announcement.
The US government shutdown, which began Oct 1, delayed the release of the monthly jobs report last Friday, which is crucial to investors given how closely traders are monitoring the labor market to see whether its slowdown is enough for the Federal Reserve to keep cutting interest rates. Of course, past shutdowns have not hurt the economy or stock market much, and the thinking is that this one may be similar.
“The stock market is shrugging off the government shutdown, and is more focused on earnings optimism and the prospect of additional Federal Reserve rate cuts,” wrote Robert Edwards, chief investment officer at Edwards Asset Management.
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A batch of alternative job indicators last week pointed to tepid hiring, reinforcing expectations that the Fed will cut rates again at its next meeting. The White House tightened its pressure on congressional Democrats as the shutdown lurched into a second week, saying it would give the holdouts another chance to agree to the spending bill before initiating mass firings of federal workers.
The equities rally has persisted despite cautious forecasts and warnings about elevated valuations. That leaves traders eyeing the AI frenzy and the massive spending underway because it is one of the main drivers of the US stock market, which has been setting new highs.
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Of note, Micron Technology rose 1.7% as Morgan Stanley upgrades to overweight, saying the chipmaker is headed for multiple quarters of double-digit price increases. Meanwhile, Verizon Communications fell 5.1% after the telecommunications company named Dan Schulman as CEO, replacing Hans Vestberg. And Abercrombie & Fitch shares declined 7.8% after JPMorgan analyst Matthew Boss cut his recommendation on the apparel retailer to neutral from overweight and reduced his sales estimates.
Elsewhere, cryptocurrency-exposed stocks are rallying after Bitcoin set another all-time high over the weekend, surpassing $125,000 early on Sunday. Strategy rose 2.3%, while Circle Internet Group, Riot Platforms and MARA Holdings all advanced. Meantime, Critical Metals surged 45%, its best day since June 16, after Reuters reports the Trump administration has discussed taking a stake in the metal mining company.
Corporate earnings season kicks off next week, with results from JPMorgan Chase & Co due on Oct 14. US companies are set to enjoy a better-than-expected earnings season as a strong economy and a solid outlook for AI have left estimates looking too low, according to Goldman Sachs Group Inc strategists. The team led by David Kostin expects the so-called Magnificent Seven group of technology heavyweights to beat expectations.
