U.S. equities, led by semiconductor and AI infrastructure stocks, are advancing towards record highs, fueled by optimism for AI-driven corporate profits, lower bond yields, and expectations of Federal Reserve easing. Despite this positive momentum, the ongoing government shutdown is delaying key economic data and contributing to haven asset demand, with gold soaring to a new record. While some Q3 earnings guidance is strong, overall profit growth is projected to decelerate, and markets are pricing in a high probability of a Fed rate cut at the next FOMC meeting.
The S&P 500 Index ($SPX) (SPY) today is up +0.36%, the Dow Jones Industrials Index ($DOWI) (DIA) is up +0.19%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +0.57%. December E-mini S&P futures (ESZ25) are up +0.39%, and December E-mini Nasdaq futures (NQZ25) are up +0.59%. Stock indexes are moving higher today, with the S&P 500 and Nasdaq 100 just below Tuesday’s record highs. Strength in semiconductor and AI infrastructure stocks today is supporting gains in the broader market. Optimism that growth in the AI sector and spending on artificial intelligence will translate into corporate profits is a major bullish factor for stocks. Stocks are also underpinned by hopes that a resilient US economy and additional Fed easing will continue to support the economy. In addition, lower bond yields are bullish for stocks as the 10-year T-note yield is down -1 bp to 4.11%. US MBA mortgage applications fell -4.7% in the week ended October 3, with the purchase mortgage sub-index down -1.2% and the refinancing mortgage sub-index down -7.7%. The average 30-year fixed rate mortgage fell -3 bp to 6.43% from 6.46% in the prior week. The shutdown of the US government is now into its second week, weighing on market sentiment and delaying key economic reports. The government shutdown means delays in the release of government reports, including Tuesday’s Aug US trade report and last Friday’s monthly payroll report. A prolonged shutdown could also delay the government’s inflation data, scheduled for release on October 15. The White House has warned that if the government shutdown lingered, it would trigger widespread dismissals of employees in government programs that don’t align with President Trump’s priorities. Bloomberg Economics estimates that 640,000 federal workers will be furloughed during the shutdown, which would expand jobless claims and push the unemployment rate up to 4.7%. The ongoing US government shutdown, expectations of additional Fed easing, President Trump’s assault on the Fed, and political uncertainty in France and Japan are all driving investors to haven assets, such as gold and Bitcoin. Gold prices soared above $4,000 an ounce to another record high today. According to the latest data, the People’s Bank of China added to its gold holdings in September for an eleventh consecutive month. Market focus this week will be on any new developments regarding tariffs, trade, or attempts by lawmakers to end the ongoing US government shutdown. Later today, the minutes of the September 16-17 FOMC meeting will be released. On Thursday, Fed Chair Powell will give welcoming remarks at a Fed Community Bank Conference. On Friday, the University of Michigan Oct consumer sentiment index is expected to fall -1.1 to 54.0. Rising corporate earnings expectations are a bullish backdrop for stocks. According to Bloomberg Intelligence, more than 22% of companies in the S&P 500 provided guidance for their Q3 earnings results that are expected to beat analysts’ expectations, the highest in a year. However, Q3 profits are expected to have risen by +7.2%, the smallest increase in two years. Also, Q3 sales growth is projected to slow to +5.9% from 6.4% in Q2. The markets are pricing in a 93% chance of a -25 bp rate cut at the next FOMC meeting on Oct 28-29. Overseas stock markets today are mixed. The Euro Stoxx 50 is up +0.53%. China’s Shanghai Composite did not trade and is closed for the week-long Lunar New Year holiday. Japan’s Nikkei Stock 225 closed down -0.45%. Interest Rates December 10-year T-notes (ZNZ5) today are up by +3 ticks. The 10-year T-note yield is down -1.4 bp to 4.109%. T-note prices are supported today by the ongoing US government shutdown, which could lead to additional job losses, reduced consumer spending, and a weakened US economy, allowing the Fed to continue cutting interest rates. Supply pressures are limiting gains in T-note prices as the Treasury will auction $39 billion of 10-year T-notes later today as part of this week’s $119 billion of T-note and T-bond auction package. European government bond yields are moving lower today. The 10-year German bund yield dropped to a 3-week low of 2.666% and is down -3.2 bp at 2.678%. The 10-year UK gilt yield is down by -1.7 bp to 4.702%. German Aug industrial production fell -4.3% m/m, weaker than expectations of -1.0% m/m and the biggest decline in almost 3.5 years. ECB Governing Council Member Muller said the Eurozone economy is slowly picking up and inflation is in line with the ECB’s 2% target. Swaps are discounting a 1% chance for a -25 bp rate cut by the ECB at its next policy meeting on October 30. US Stock Movers Chip makers and AI infrastructure stocks are climbing today, a supportive factor for the broader market. Dell Technologies (DELL) is up more than +7% to lead gainers in the S&P 500, and Micron Technology (MU) is up more than +5% to lead gainers in the Nasdaq 100. Also, Advanced Micro Devices (AMD) is up more than +4% and ON Semiconductor (ON) is up more than +3%. In addition, Nvidia (NVDA) and Marvell Technology (MRVL) are up more than +2%, and NXP Semiconductors NV (NXPI), Analog Devices (ADI), and Texas Instruments (TXN) are up more than +1%. Gold mining stocks are moving higher today after the price of gold soared over $4,000 an ounce to a new record high. Anglogold Ashanti Plc (AU), Coeur Mining (CDE), and Gold Fields Ltd (GFI) are up more than +2%, and Newmont (NEM) is up more than +1%. Confluent (CFLT) is up more than +11% after Reuters reported the company is exploring a sale after receiving acquisition interest. AST SpaceMobile (ASTS) is up more than +8% after signing an agreement to provide direct-to-cellular connectivity when needed for Verizon customers starting in 2026. Rocket Lab (RKLB) is up more than +7% after signing a contract with iQPS to launch three more satellites for the Japanese company. Datadog (DDOG) is up more than +5% after Bernstein raised its price target on the stock to $170 from $147. Freeport-McMoRan (FCX) is up more than +4% after Citigroup upgraded the stock to buy from neutral with a price target of $48. Constellation Energy (CEG) is up more than +2% to lead gainers in the Nasdaq 100 after Seaport Global Securities upgraded the stock to buy from neutral with a price target of $407. Penguin Solutions (PENG) is down more than -16% after forecasting fiscal 2026 sales of $1.31 billion-$1.59 billion, the midpoint below the consensus of $1.48 billion. Joby Aviation (JOBY) is down more than -11% after offering a $500 million block of shares overnight in a range of $16.85-$17.35, well below Tuesday’s closing price of $18.91. Fair Isaac Corp (FICO) is down more than -3% to lead losers in the S&P 500 after rival Equifax said its VantageScore 4.0 service will offer mortgage credit scores at $4.50 through the end of 2027. Defensive food-producing companies are sliding today as the overall market strengthens. J M Smucker (SJM) is down more than -2%. Also, Tyson Foods (TSN), General Mills (GIS), Kraft Heinz (KHC), Conagra Brands (CAG), and the Campbell Company (CPB) are down more than -1%. Intercontinental Exchange (ICE) is down more than -2% after TD Cown cut its price target on the stock to $199 from $212. Live Nation Entertainment (LYV) is down more than -2% after announcing it intends to offer $1.3 billion in convertible senior notes due 2031. Edwards Lifesciences (EW) is down more than -1% after Oppenheimer & Co. downgraded the stock to market perform from outperform. Earnings Reports(10/8/2025) Acuity Inc (AYI), Cal-Maine Foods Inc (CALM), Conagra Brands Inc (CAG), Novagold Resources Inc (NG), Rezolve AI PLC (RZLV), RPM International Inc (RPM). On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here. More news from Barchart - Don’t Doubt the Dow 30. These 3 Stalwart Stocks Are Flashing Signals of Gains Ahead. - As Jeff Bezos Warns of an ‘AI Bubble,’ This Could Be the Safest Magnificent 7 AI Stock to Buy Now - As SoundHound Announces New Apivia Deal, Should You Buy, Sell, or Hold SOUN Stock? - Analysts Say Micron Has ‘More Room to Run.’ Should You Buy MU Stock Here? The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. US equity markets are showing upward momentum, with the S&P 500 and Nasdaq 100 nearing record highs, significantly driven by strength in semiconductor and AI infrastructure stocks such as Dell (+7%) and Micron (+5%). This rally is underpinned by investor optimism that AI sector growth and spending will translate into corporate profits, alongside expectations of further Federal Reserve easing evidenced by a 93% probability of a 25 basis point rate cut at the next FOMC meeting. Lower bond yields, with the 10-year T-note down to 4.11%, are also providing a bullish tailwind. Despite market gains, several headwinds persist, notably the ongoing US government shutdown entering its second week, which is delaying crucial economic reports and potentially furloughing 640,000 federal workers, pushing unemployment to 4.7%. While over 22% of S&P 500 companies provided Q3 guidance above expectations, Q3 profit growth is projected at a more modest +7.2% (a two-year low), and sales growth is expected to decelerate to +5.9% from Q2's 6.4%. The government shutdown and geopolitical uncertainties are fueling demand for haven assets, with gold soaring above $4,000 an ounce to a new record high, supported by continued People's Bank of China purchases. Concurrently, European economic data shows weakness, exemplified by Germany's industrial production falling -4.3% month-over-month, its largest decline in nearly 3.5 years, though the ECB suggests inflation is aligning with its 2% target.
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