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AMD soars after OpenAI deal

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Tesla up as company teases Tuesday event

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Crypto companies gain as bitcoin breaches $125k

(Updates to market close)

By Stephen Culp

NEW YORK, Oct 6 (Reuters) - The S&P 500 and the Nasdaq

advanced on Monday, as artificial intelligence-related

dealmaking boosted investor sentiment even as the U.S.

government shutdown extended through its sixth day.

The Nasdaq and the S&P 500 reached record closing highs,

while the blue-chip Dow inched lower.

Chips took the lead after AMD said it would

supply AI chips to OpenAI in a deal that could generate tens of

billions of dollars in yearly revenue and would allow the

ChatGPT creator to buy a stake of up to 10% in the chipmaker.

AMD surged, pushing the broader Philadelphia Semiconductor

Index higher.

"The market is seeing some strength in areas like technology

and consumer discretionary and it's flying in the face of the

government shutdown," said Robert Pavlik, senior portfolio

manager at Dakota Wealth in Fairfield, Connecticut. "The market

is still interested in the AI trade and the companies that

support and use it."

"It's a wave and waves don't go on forever; it will

eventually crest and decline," Pavlik added. "But where are we

this cycle of the wave? It's impossible to know."

The federal government remained shuttered for the sixth day

as lawmakers idled in a partisan impasse. The shutdown has

postponed the release of key economic indicators, forcing

investors to rely on secondary, non-government data to gauge the

timing and extent of Federal Reserve interest rate cuts.

Monetary policymakers have cautioned against rushing to

lower the Federal Funds target rate as inflation remains high,

while others believe signs of softness in the labor market merit

rate cuts.

Financial markets have priced in an all-but-certain 94.6%

chance of a 25 basis point interest rate reduction at the

conclusion of the Fed's October meeting.

Without new U.S. government data this week, market

participants are monitoring reports on outstanding consumer

credit, mortgage demand and the University of Michigan's

preliminary take on October consumer sentiment.

According to preliminary data, the S&P 500

gained 24.52 points, or 0.37%, to end at 6,740.31 points,

while the Nasdaq Composite gained 160.69 points, or

0.71%, to 22,941.19. The Dow Jones Industrial Average

fell 63.19 points, or 0.14%, to 46,695.50.

Next week, third-quarter earnings will provide market

catalysts as the reporting season gets underway with results

from large U.S. banks.

Analysts estimate aggregate year-on-year S&P 500 earnings

growth of 8.8% for the July-to-September period, up 0.8

percentage points from projections at the beginning of the third

quarter, according to LSEG data.

Tesla advanced after the electric carmaker teased

an event scheduled for Tuesday on social media platform X over

the weekend.

TD Cowen cut its Starbucks ( SBUX ) price target, citing a

weakening labor market affecting Generation Z, sending the

coffee chain's shares lower.

Bitcoin breached the $125,000 mark on Sunday, sending

crypto-related firms Coinbase, Strategy, Riot

Platforms ( RIOT ) and MARA Holdings ( MARA ) higher.

Regional bank Comerica ( CMA ) jumped after Fifth Third

said it will buy the company in an all-stock deal valued at

$10.9 billion.

Verizon shares dipped after the telecommunications

company named former PayPal boss Dan Schulman as its

new chief executive officer.