The tech-laden Nasdaq enjoyed the biggest percentage gain, boosted by the artificial intelligence-related megacaps that have led market gains so far this year.
The S&P 500 and the Nasdaq notched all-time closing highs, while the Dow ended essentially flat.
Chip stocks were clear outperformers, while energy , consumer staples and homebuilders were the laggards, as a report from the Mortgage Bankers Association showed home loan demand dipped 4.7% last week despite easing interest rates.
“The theme continues to be aggressive growth, with a constant supply of deal announcements, one after the other that are related to the AI space,” said Bill Merz, head of Capital Market Research at U.S. Bank Wealth Management, Minneapolis.
“Anything attached to AI is garnering a significant amount of attention.” Amid continuing euphoria surrounding AI, mounting U.S. and geopolitical uncertainty has pushed gold prices above the $4,000-per-ounce threshold as investors flock to the safe-haven metal as a hedge against growing risks. “We’ve seen in the last few years that stocks and safe havens can work in conjunction with each other,” Merz added. “A part of that comes from this dual reality that … fundamentals, for now, are supporting higher than normal valuation, and simultaneously, deficit spending has to be financed by additional debt.” The U.S. government shutdown entered its eighth day, and a congressional stalemate appeared to suggest market participants will lack official economic indicators for the immediate future, leaving markets with little to go on until third-quarter earnings season kicks off next week.
In the absence of data, investors looked to third-quarter earnings season to get underway next week and the minutes from the September meeting of the Federal Open Markets Committee (FOMC) for clues as to the central bank’s intentions regarding interest rate cuts.
Those minutes showed a divided committee, with policymakers concerned about rising labor market risks but still wary of inflation. And while “most judged that it likely would be appropriate to ease policy further over the remainder of this year,” the timing and pace of further moves remained an open question.
“The topical discussion is about the extent of Fed cuts and how restrictive or not policy is,” said Zachary Hill, head of portfolio management at Horizon Investments in Charlotte, North Carolina. “More broadly, the Fed is definitely not in a great position without public sector economic data as (the shutdown) continues to drag on, which really just makes policymakers’ already challenging job even tougher.”
Financial markets are currently pricing in a fairly certain 92.5% likelihood that the Fed will lower the Fed funds target rate by 25 basis points at the conclusion of this month’s policy meeting, which is set to occur on October 29.
The Dow Jones Industrial Average fell 1.20 points, or 0.00%, to 46,601.78, the S&P 500 gained 39.13 points, or 0.58%, to 6,753.72 and the Nasdaq Composite gained 255.02 points, or 1.12%, to 23,043.38.
Among the 11 major sectors of the S&P 500, tech shares led the gainers, while energy stocks had the steepest percentage loss. Datadog rose 6.2% after Bernstein raised its price target on the cloud security firm, while Intercontinental Exchange ICE.N fell 2.2% after Barclays cut its price target on the stock. Fair Isaac Corp fell 9.8% after credit bureau Equifax said it plans to offer cheaper mortgage credit scores. Surging gold prices helped U.S.-listed shares of gold miners Newmont and Gold Fields gain 1.7% and 3.7%, respectively. Dell rose 9.1% after multiple brokerages raised their price targets for the stock. Freeport-McMoRan advanced 5.3% in the wake of Citigroup’s upgrade to “buy” from “neutral”. Joby Aviation declined 8.1% after the electric air taxi maker on Tuesday priced a $514 million share sale at a 10.9% discount to its last closing price. AMD jumped 11.4%, extending its gains for the third day. The chipmaker’s shares have surged over 43% this week.
Advancing issues outnumbered decliners by a 1.74-to-1 ratio on the NYSE. There were 469 new highs and 70 new lows on the NYSE.
On the Nasdaq, 3,007 stocks rose and 1,659 fell as advancing issues outnumbered decliners by a 1.81-to-1 ratio.
The S&P 500 posted 35 new 52-week highs and 6 new lows while the Nasdaq Composite recorded 129 new highs and 62 new lows.
Volume on U.S. exchanges was 20.70 billion shares, compared with the 19.63 billion average for the full session over the last 20 trading days.
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