The S&P 500 and Nasdaq Composite advanced on Monday, buoyed by a significant surge in AMD shares following a major partnership with OpenAI. The tech-heavy Nasdaq rose 0.4%, while the broad S&P 500 gained 0.2%. In contrast, the Dow Jones Industrial Average fell 114 points, or 0.3%, weighed down by declines in Home Depot and Verizon.
The technology sector’s gains were primarily driven by AMD, which saw its stock soar more than 20%. The rally came after the chipmaker announced a deal to supply OpenAI with graphics processing units over several years. The agreement could result in the AI leader acquiring a 10% stake in AMD. Shares of Nvidia, AMD’s primary competitor, faced pressure following the news.
In other market-moving news, Comerica shares jumped over 10% after Fifth Third Bancorp agreed to acquire the regional bank for $10.9 billion in an all-stock deal, which will create the ninth-largest U.S. bank by assets. The announcement lifted the SPDR S&P Regional Banking ETF (KRE) as investors anticipated further consolidation in the sector, contributing to a recent uptick in overall merger and acquisition activity.
Meanwhile, investors largely disregarded the U.S. government shutdown, which entered its second week after lawmakers again failed to agree on a funding bill. The shutdown has delayed the release of key economic data, including the September jobs report that was scheduled for last Friday.
“As of now, 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,” said Robert Edwards, chief investment officer at Edwards Asset Management. He added that his firm would view any significant market dip from the shutdown as a buying opportunity and maintained a year-end target of 7,000 for the S&P 500.
In the absence of economic data, market participants will turn their attention to upcoming speeches from several Federal Reserve officials this week, including Governor Stephen Miran on Wednesday and Chair Jerome Powell on Thursday.
Monday’s session built on recent positive momentum. The S&P 500 and Nasdaq are coming off their fourth winning week in the last five, rising 1.1% and 1.3%, respectively. The Dow gained 1.1% last week, marking its third advance in four weeks.
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