Wall Street’s rally extends
US stock index futures were a tad weaker in early trade this morning. This was despite continued strength across the chip sector. Investors reacted positively to yesterday’s news of OpenAI’s massive investment in Advanced Micro Devices (AMD). AMD’s stock price surged 37% initially after ChatGPT’s parent company announced that it was making a multi-billion-dollar investment in the semiconductor designer.
Interestingly, this follows hot on the heels of NVIDIA’s (AMD’s chip designing rival) $100 billion investment in OpenAI. Investors continue to ‘follow the money’ when it comes to anything to do with generative artificial intelligence (AI). This is despite fears that the whole investment thesis looks very circular and increasingly incestuous as money gets pumped around companies within the sector. Stock indices ended Monday’s session mostly higher.
The NASDAQ got a boost from AMD, which ended the session up 24%, helping to lift the tech-heavy index by 0.7%. The S&P 500 and Russell 2000 both added 0.4%, which meant that all three indices posted fresh record closes. Meanwhile, the Dow slipped 0.1% but remains within easy reach of its own all-time high from Friday.
Source: TN Trader
Stock market strength continues to be driven by optimism surrounding potential mergers and acquisitions and expectations of Federal Reserve rate cuts. The S&P 500 has now recorded its 32nd all-time high this year and is up for seven straight sessions, while the Nasdaq has posted its 31st record high of 2025.
Small-cap stocks have also joined the move, with the Russell 2000 crossing 2,500 for the first time last week, and again on Monday. The rally has broadened out recently, which is a positive development, and comes despite the US government shutdown, which is now in its seventh day.
According to Treasury Secretary Scott Bessent, the shutdown could have a negative effect on US economic growth. It also could result in huge job losses if furloughed workers get laid off permanently, as the Trump administration has warned.
On top of this, more economic updates will likely be postponed, following on from last Friday’s September Non-Farm Payroll report. This will cloud the perspective for economic analysts, particularly those at the Federal Reserve who are responsible for monetary policy. But the latest update from the CME’s FedWatch Tool calculates that this has only raised the probability that the Fed will cut rates by 50 basis points before the end of the year.
Attention now turns to the minutes from the last FOMC meeting, due tomorrow, and remarks from several Fed officials this week, including Vice Chair Michelle Bowman, Governor Stephen Miran and Minneapolis Fed President Neel Kashkari. Investors will also be watching the first major corporate earnings of the quarter, with results from PepsiCo and Delta Air Lines due on Thursday.