US stocks were mixed on Monday as the federal government shutdown carried over into another week, but the AI trade stole the spotlight. A blockbuster deal between Advanced Micro Devices and OpenAI sent AMD shares soaring, lifting tech stocks and helping offset broader uncertainty.
The Nasdaq Composite gained 0.7% by midday, leading the advance, while the S&P 500 rose 0.4%. The Dow Jones Industrial Average slipped 0.2%, weighed down by concerns related to shutdowns and weakness in some blue-chip stocks.
Market Movers:
- AMD (AMD) +29%: Shares exploded higher after announcing a multiyear chip-supply deal with OpenAI worth tens of billions of dollars annually. The agreement also gives OpenAI an option to buy up to 10% of AMD, cementing the chipmaker as a critical rival to Nvidia in the AI arms race. The stock added more than $100 billion in market cap in early trading, marking one of its largest one-day gains in decades.
- Nvidia (NVDA) -0.5%: Nvidia slipped slightly despite continued enthusiasm for AI, as AMD’s landmark agreement with OpenAI shifted some investor attention. Analysts say Nvidia’s dominance remains intact, but the news highlighted growing competition in the high-demand GPU market.
- Tesla (TSLA) +3%: Tesla climbed after cryptic social media posts hinted at possible product reveals ahead of its November 6 investor conference. Investors are betting on new announcements tied to robo-taxis or humanoid robots, fueling renewed optimism after a rocky year.
- PepsiCo (PEP) -0.7%: Shares of Pepsi dipped ahead of earnings due later this week. Analysts expect solid results, but with valuations high, investors appear cautious on consumer staples amid signs of slowing demand.
AI Trade Dominates Despite Shutdown
The AMD-OpenAI partnership reinforced how artificial intelligence continues to drive market momentum even as Washington gridlock clouds the economic outlook. AMD will supply OpenAI with massive computing power to train advanced AI models, positioning itself as a second supplier alongside Nvidia. Wall Street cheered the news as another confirmation that AI spending is not only accelerating but also diversifying.
This surge in AI-linked optimism has helped the broader market stay strong despite the ongoing government shutdown. With key agencies closed, including the Bureau of Labor Statistics, key data like the September jobs report won’t be released until Congress reaches a deal. That leaves traders leaning on private estimates to gauge the economy and the Fed’s next move.
Fed Uncertainty and Global Ripples
The lack of official data is complicating the Federal Reserve’s path. Investors are now pricing in two rate cuts before year-end, betting that political dysfunction and weakening private employment reports will push the Fed to ease policy faster. Fed Governor Stephen Miran is set to speak on Wednesday, followed by Chair Jerome Powell on Thursday, events that could help reset market expectations.
Outside the US, global developments rattled investors. France’s CAC 40 index slumped after the sudden resignation of its prime minister reignited political turmoil. Meanwhile, Japan’s Nikkei 225 surged nearly 5% to record highs, with markets buoyed by the unexpected selection of ultraconservative Sanae Takaichi as the country’s next leader. Analysts see her as favoring heavy stimulus, adding to the “run-it-hot” policy trend seen across major economies.
Safe Havens Surge
Investors are also hedging against uncertainty by piling into gold, silver, and Bitcoin, all of which touched record highs. Gold neared $4,000 per ounce, silver climbed above $48, and Bitcoin jumped over $125,000. Analysts say the “debasement trade”—a flight into hard assets as governments rack up debt and ease monetary policy—is once again in play. This dynamic adds another layer to the market rally, raising questions about sustainability if asset valuations become stretched.
Looking Ahead
The market’s next moves depend on the balance between AI-fueled optimism and growing risks from Washington gridlock. With official economic reports delayed by the shutdown, investors will be especially sensitive to Fed commentary and alternative data sources this week. Third-quarter earnings season is also set to kick off, with results from PepsiCo, Delta Air Lines, and Levi Strauss offering an early read on consumer demand and corporate health. Whether the AI boom can keep powering markets higher amid political dysfunction and inflation concerns will be the central question as October trading unfolds.
