Overview of the U.S. Stock Market Performance on Monday
On Monday, the U.S. stock market closed with mixed results as technology and software companies propelled the S&P 500 and Nasdaq Composite, while a partial government shutdown continued to elude lawmakers.
- Nasdaq Composite: Up by 0.7% to 22,941.67 points, reaching a new high of 22,991.71 points at the start of trading.
- S&P 500: Increased by 0.4% to 6,740.28 points.
- Dow Jones Industrial Average: Down by 0.1% to 46,694.97 points.
The gains were primarily driven by the discretionary consumer, communication services, and technology sectors. Meanwhile, basic consumer goods and real estate stocks experienced losses.
Key Company Developments
- Advanced Micro Devices (AMD): The company announced a multi-year agreement to supply OpenAI, backed by Microsoft, with 6 gigawatts of graphics processing units.
- Tesla: Shares increased by over 5.4% after the electric vehicle manufacturer hinted at an upcoming event or announcement, likely scheduled for Tuesday.
Benchmark adjusted its price target for Advanced Micro Devices stock from $210 to $270, causing the stock to surge by 24%, outperforming both the S&P 500 and Nasdaq.
Market Analyst Perspectives
Robert Pavlik, a portfolio manager at Dakota Wealth, commented on the market’s performance:
- Technology and Discretionary Consumer Sectors: “The U.S. stock market is seeing strength in areas like technology and discretionary consumer goods, despite the government shutdown.”
- AI and Supporting Companies: “The market remains interested in AI trading and the companies that support and utilize it.”
- Market Cycles: “Waves don’t last forever; they will crest and decline. But where are we in this wave cycle? It’s impossible to know.”
Government Shutdown Impact
The federal government remained closed for the sixth consecutive day, with lawmakers remaining deadlocked in a partisan impasse.
- Delayed Economic Indicators: The shutdown postponed the release of key economic reports, forcing investors to rely on non-governmental secondary data to gauge the timing and extent of Federal Reserve interest rate cuts.
- Potential Data Unavailability: If the stalemate persists, crucial data on trade and unemployment insurance claims may not be published.
Federal Reserve Interest Rate Expectations
Jennifer Timmerman, an investment strategy analyst at Wells Fargo Investment Institute, noted in a client note:
- FOMC Rate Cuts Probability: The likelihood of the Federal Open Market Committee (FOMC) reducing the benchmark interest rate by a total of 50 basis points for December increased to 83% by the end of Monday, up from 67% a week prior.
- Previous Rate Cut Expectations: Just a month ago, the probability of a 25 basis point Fed rate reduction was at 95%.
- Revised Growth Outlook: “The increased probability of more aggressive interest rate cuts in the coming months is one reason we recently raised our U.S. growth outlook for 2025 and 2026,” Timmerman added.
Key Questions and Answers
- Q: What were the major sectors driving gains in the U.S. stock market on Monday?
- Q: How did Advanced Micro Devices (AMD) stock perform after the announcement of a multi-year agreement with OpenAI?
- Q: What is the current probability of FOMC rate cuts, according to Jennifer Timmerman?
A: The discretionary consumer, communication services, and technology sectors led the gains.
A: AMD’s stock surged by 24%, outperforming both the S&P 500 and Nasdaq after Benchmark adjusted its price target to $270.
A: The probability of the FOMC reducing benchmark interest rates by 50 basis points for December is now at 83%, up from 67% a week prior.
