US close: Stocks hit new highs on AI, rate-cut hopes

(Sharecast News) - Surging optimism in the AI sector and interest rate-cut hopes powered two of Wall Street's three main indices to new record highs on Monday. The Dow slipped 0.1%, ending a six-day winning streak that sent it to a new high on Friday. However, the S&P 500 gained 0.4% to 6,740.28 and the tech-heavy Nasdaq rose 0.7% to 22,941.67 - both record closing highs for the benchmarks.

The notable performer of the day was chipmaker AMD which rallied 24% after unveiling a multi-year infrastructure deal with OpenAI, under which it will supply high-performance graphics chips to power the ChatGPT developer's next-generation AI systems.

"Markets are once again proving that narrative is everything - and right now, that narrative is silicon-fuelled and seemingly unstoppable," said Stephen Innes, managing partner at SPI Asset Management. "It's as if the whole financial world has fallen under the spell of the AI locomotive - an iron beast thundering through political potholes and fiscal fog, flattening everything from Washington gridlock to French cabinet drama to Japan's political earthquake beneath its treads."

Investors largely shrugged off the Federal government shutdown, now in its sixth day, which has delayed key macro releases, including September's all-important non-farm payrolls report. While shutdowns lasting more than a week are incredibly rare, a prolonged gridlock could force the Federal Reserve to make a monetary policy decision at its next meeting (28-29 October) with limited economic data. For reference, the longest shutdown on record lasted for 35 days back in 1995-96.

Focus is now turning to the release of the minutes of the most recent Federal Open Market Committee meeting, due out on Wednesday afternoon, as investors attempt to glean any insight into the central bank's next move.

"If the shutdown continues, then the CPI data, that is schedule for release on 15th October, may also be delayed," said Kathleen Brooks, research director at XTB. "The Fed minutes may suggest that Fed members are concerned about inflation. While this could weigh on stocks, the shutdown could force the Fed to cut rates."

AMD soars

AMD's agreement with OpenAI, which sent the stock to its highest in 18 months, will see the semiconductor group supply high-performance graphics chips to power the ChatGPT developer's next-generation AI systems. The agreement includes a commitment to deliver up to six gigawatts of computing capacity, with the first gigawatt expected to come online in the second half of 2026.

As part of the deal, AMD has issued OpenAI a warrant to purchase up to 160m shares, equivalent to 10% of its common stock, subject to deployment-linked milestones.

Regional banks also rallied, with Comerica up 14% after Fifth Third Bancorp agreed to acquire the lender in an all-stock deal worth $10.9bn, creating the ninth-largest US bank by assets.

Meanwhile, Tesla rose 5% after teasing a new product launch this week - which would be its first in a year. In an X post on Sunday, the EV maker put out a cryptic message with the date "10/7".

Elsewhere, Verizon weighed on the Dow after it announced that it had appointed its independent lead director, Dan Schulman, as the company's new chief executive officer, effective immediately. The former PayPal CEO will succeed Hans Vestberg, who had been CEO since 2018. Vestberg will serve as a special advisor and stay on the the company's board of directors until Verizon's 2026 annual general meeting.

Dow Jones - Risers

Salesforce.Com Inc. (CRM) $245.78 2.25% Microsoft Corp. (MSFT) $528.57 2.17% Cisco Systems Inc. (CSCO) $68.91 1.46% Boeing Co. (BA) $219.35 1.41% Goldman Sachs Group Inc. (GS) $795.44 0.69% Walmart Inc. (WMT) $102.70 0.62% International Business Machines Corporation (CDI) (IBM) $290.10 0.60% American Express Co. (AXP) $331.99 0.53% Walt Disney Co. (DIS) $112.90 0.38% Chevron Corp. (CVX) $154.12 0.37%

Dow Jones - Fallers

Verizon Communications Inc. (VZ) $41.44 -5.11% 3M Co. (MMM) $155.63 -1.91% Dow Chemical Co. (DOW) $23.42 -1.68% McDonald's Corp. (MCD) $296.04 -1.64% Home Depot Inc. (HD) $388.84 -1.57% Amgen Inc. (AMGN) $294.10 -1.27% Nike Inc. (NKE) $71.17 -1.06% Procter & Gamble Co. (PG) $150.74 -1.00% Coca-Cola Co. (KO) $66.10 -0.83% Travelers Company Inc. (TRV) $282.23 -0.82%

S&P 500 - Risers

Advanced Micro Devices Inc. (AMD) $203.71 23.71% Comerica Inc. (CMA) $79.80 13.11% CenturyLink Inc. (LUMN) $7.16 9.22% Ipg Photonics Corp. (IPGP) $88.29 4.29% Albemarle Corp. (ALB) $91.89 4.16% Helmerich & Payne Inc. (HP) $23.94 3.86% Humana Inc. (HUM) $294.28 3.72% KLA-Tencor Corp. (KLAC) $1,139.71 3.46% Paypal Holdings Inc (PYPL) $71.29 2.95% Applied Materials Inc. (AMAT) $223.91 2.93%

S&P 500 - Fallers

Harley-Davidson Inc. (HOG) $26.61 -6.20% Verizon Communications Inc. (VZ) $41.44 -5.11% DENTSPLY Sirona Inc. (XRAY) $12.52 -5.08% Advance Auto Parts (AAP) $58.26 -5.02% Starbucks Corp. (SBUX) $82.11 -4.99% Alexandria Real Estate Equities Inc. (ARE) $79.92 -4.63% VF Corp. (VFC) $14.49 -4.61% Western Digital Corp. (WDC) $125.28 -4.59% AT&T Inc. (T) $25.87 -4.40% Seagate Technology Plc (STX) $242.83 -3.94%

Nasdaq 100 - Risers

Tesla Inc (TSLA) $453.25 5.45% KLA-Tencor Corp. (KLAC) $1,139.71 3.46% Paypal Holdings Inc (PYPL) $71.29 2.95% Applied Materials Inc. (AMAT) $223.91 2.93% J.B. Hunt Transport Services Inc. (JBHT) $141.72 2.73% Lam Research Corp. (LRCX) $149.15 2.29% Microsoft Corp. (MSFT) $528.57 2.17% American Airlines Group (AAL) $11.83 2.16% Expedia Group Inc. (EXPE) $223.83 2.10% Alphabet Inc. Class A (GOOGL) $250.43 2.07%

Nasdaq 100 - Fallers

DENTSPLY Sirona Inc. (XRAY) $12.52 -5.08% Starbucks Corp. (SBUX) $82.11 -4.99% Western Digital Corp. (WDC) $125.28 -4.59% Seagate Technology Plc (STX) $242.83 -3.94% Biogen Inc (BIIB) $154.05 -3.65% Kraft Heinz Co. (KHC) $25.27 -3.03% Liberty Global plc Series A (LBTYA) $11.42 -2.89% Trip.com Group Limited (TCOM) $71.38 -2.65% Dollar Tree Inc (DLTR) $87.68 -2.56% Regeneron Pharmaceuticals Inc. (REGN) $585.48 -2.42%