Key Takeaways
- Major stock indexes rose as Amazon’s $38 billion OpenAI deal fueled tech optimism
- Dollar hit 3-month high against euro as Fed rate cut expectations fade
- Traders now see 70% chance of December rate cut, down from 94% last week
Wall Street advanced on Monday, powered by a major technology partnership between Amazon and OpenAI that boosted investor sentiment. Meanwhile, the US dollar strengthened to its highest level in three months against the euro as markets scaled back expectations for aggressive Federal Reserve rate cuts.
The benchmark S&P 500 and tech-heavy Nasdaq Composite both posted gains, while the Dow Jones Industrial Average declined slightly. Amazon shares closed 4% higher following news the company will provide cloud-computing services to OpenAI in a multi-year deal valued at $38 billion.
“We’re still looking at this as a market driven by the technology revolution that is certainly in full swing given AI,” said Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder in New York.
“I don’t see that slowing down at all. The bigger companies have these massive R&D budgets that are just going to keep cranking out new things. We will continue to see that for the foreseeable future.”
Market Performance Details
The Dow Jones Industrial Average fell 226.19 points (0.48%) to 47,336.68. The S&P 500 gained 11.77 points (0.17%) to 6,851.97, and the Nasdaq Composite climbed 109.77 points (0.46%) to 23,834.72.
Global markets followed the positive trend, with MSCI’s worldwide stock index rising 0.15% to 1,007.70 and Europe’s STOXX 600 adding 0.07%.
Fed Policy Uncertainty Weighs
Federal Reserve Chair Jerome Powell stated last week that a December rate cut was “not a foregone conclusion,” contradicting market expectations that had priced the move as nearly certain. Traders now assign roughly 70% probability to a 25 basis point cut in December, down from 94% a week earlier.
Fed officials continued expressing conflicting views about the economic outlook on Monday, with the ongoing government shutdown preventing the release of official data that could clarify the situation.
Currency Markets React
The dollar index, which tracks the US currency against major counterparts, rose 0.08% to 99.89. The euro dipped to $1.152225, after touching $1.1505 earlier – its weakest level since August 1.
The dollar strengthened 0.13% against the Japanese yen to 154.2, while sterling weakened 0.12% to $1.3135 ahead of the Bank of England’s rate decision later this week.
Manufacturing data showed contraction for the eighth consecutive month in October, with new orders remaining subdued amid ongoing tariff impacts.
Other Market Movements
U.S. Treasury yields increased as corporate debt issuance remained high. The benchmark 10-year yield reached 4.107%, while the two-year yield held at 3.6%.
In commodities, U.S. crude edged up 7 cents to $61.05 per barrel, and Brent crude gained 12 cents to $64.89. Spot gold dipped slightly to $4,000.26 per ounce, while bitcoin fell 2.6% to $107,152.
Investors await earnings reports this week from Advanced Micro Devices, Qualcomm, Uber, and McDonald’s, looking for returns on substantial AI investments.
The Supreme Court will hear arguments Wednesday regarding the legality of former President Trump’s global tariffs, which are expected to remain in place long-term regardless of the outcome.
