[New York Stock Exchange] AI Optimism Surges on AMD-OpenAI 'Mega Deal'... S&P, Nasdaq Hit Record Highs

AMD Surges 24% on News of 6GW Chip Supply Deal with OpenAI Over Five Years
AI Optimism Reignites; Wall Street Sees S&P 500 Surpassing 7,000 by Year-End
U.S. Government Shutdown Enters Sixth Day as Investors Remain Unfazed

The three major indexes on the New York Stock Exchange closed mixed on October 6 (local time). News of a major contract between U.S. semiconductor company AMD and OpenAI reignited optimism about artificial intelligence (AI), driving technology stocks higher and pushing both the S&P 500 Index and the Nasdaq Index to new all-time highs.

On this day, the blue-chip Dow Jones Industrial Average closed at 46,694.97, down 63.31 points (0.14%) from the previous session. The large-cap S&P 500 Index rose 24.49 points (0.36%) to finish at 6,740.28, while the tech-heavy Nasdaq Index jumped 161.161 points (0.71%) to close at 22,941.667, both setting new record highs.

OpenAI announced that it has signed a contract to receive 6 gigawatts (GW) worth of AI chips from AMD over the next five years. The contract also includes a provision allowing OpenAI to acquire up to a 10% stake in AMD. This announcement follows OpenAI's previous disclosure last month that it had secured up to $100 billion in investment from Nvidia.

Following the news, AMD's share price soared by 23.71%. In contrast, rival Nvidia fell by 1.12%. Another semiconductor stock, Micron, rose by 1.67%. Additionally, Microsoft and Alphabet, Google's parent company, gained 2.17% and 2.05% respectively. Renewed expectations for an AI rally drove a broad rise in technology stocks.

Louis Navellier, founder of Navellier & Associates, commented, "Semiconductor stocks are on fire," adding, "AI-related narratives continue to gain momentum."

Matt Maley, chief market strategist at Miller Tabak, analyzed, "Animal spirits around the AI phenomenon are spreading again," and noted, "It is no surprise that investors are largely ignoring the U.S. government shutdown (temporary work stoppage)."

The U.S. federal government shutdown has now entered its sixth day. On this day, the Senate once again failed to pass a temporary budget bill, further extending the shutdown. Nevertheless, investors appear to believe the shutdown will have only a limited impact on the market.

Optimistic outlooks are also emerging on Wall Street. Some experts predict that, with investor sentiment improving ahead of third-quarter earnings announcements, the S&P 500 Index could surpass the 7,000 mark by the end of the year.

Robert Edwards, Chief Investment Officer (CIO) of Edwards Asset Management, stated, "Despite concerns over the government shutdown and the labor market, the S&P 500 Index will exceed the 7,000 level by year-end." He added, "So far, the stock market has shrugged off the impact of the government shutdown and is focusing more on optimistic corporate earnings forecasts and the possibility of additional interest rate cuts by the Federal Reserve. If the market declines noticeably due to the shutdown, investors will likely see it as a stock shopping opportunity."

Due to the shutdown, the U.S. Department of Labor postponed the release of the September employment report, which was originally scheduled for October 3, resulting in a continued gap in key economic indicators. Amid this, Federal Reserve officials are set to deliver public speeches this week. Federal Reserve Chair Jerome Powell is scheduled to speak on October 9, and Governor Steven Myron will speak on October 8. With the Federal Open Market Committee (FOMC) regular meeting set for October 29, investors are expected to look for clues on the future path of interest rates in these speeches.