Stocks Settle Mostly Higher as AI Frenzy Boosts Chipmakers

Market Overview - The ongoing US government shutdown, expectations of additional Fed easing, and political uncertainty in France and Japan are driving investors towards haven assets like gold and Bitcoin, with both reaching new record highs [1] - The US government shutdown has delayed the release of key economic reports, including payroll and inflation data, potentially impacting market sentiment and jobless claims [2][3] Stock Market Performance - Stock indexes mainly settled higher, with the Nasdaq 100 reaching an all-time high, driven by Advanced Micro Devices' significant deal with OpenAI, which is expected to fuel growth in the AI sector [4] - The S&P 500 Index closed up +0.36%, while the Dow Jones Industrials Index closed down -0.14%, and the Nasdaq 100 Index closed up +0.78% [5] Corporate Earnings Expectations - Rising corporate earnings expectations are a bullish backdrop for stocks, with over 22% of S&P 500 companies guiding for Q3 earnings that are expected to beat analysts' expectations, the highest in a year [7] - Q3 profits are projected to rise by +7.2%, the smallest increase in two years, while sales growth is expected to slow to 5.9% from 6.4% in Q2 [7] Interest Rates and Economic Indicators - The markets are pricing in a 95% chance of a -25 bp rate cut at the next FOMC meeting on October 28-29, indicating expectations for further monetary easing [8] - The 10-year T-note yield rose to 4.164%, influenced by rising stock prices and supply pressures from upcoming Treasury auctions [9] International Market Developments - European government bond yields increased, with the 10-year German bund yield rising to 2.719% and the UK gilt yield climbing to 4.736% [10] - The Eurozone's October Sentix investor confidence index rose to -5.4, exceeding expectations, while ECB President Lagarde indicated inflation remains close to the 2% target [11] Notable Stock Movements - Advanced Micro Devices surged over +23% following its deal with OpenAI, leading gains in chipmakers and AI-infrastructure stocks [12] - Cryptocurrency-exposed stocks rallied as Bitcoin rose over +2% to a record high above $126,000, benefiting companies like Coinbase Global and Galaxy Digital [13] - Comerica closed up more than +13% after a significant acquisition agreement, while Firefly Aerospace also saw gains following its acquisition announcement [14]