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Indexes: S&P 500 up 0.37%, Nasdaq up 0.67%, Dow down

0.17%,

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AMD soars after OpenAI deal

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Tesla up after teasing Tuesday event

(Updates with late morning trading)

By Niket Nishant and Sukriti Gupta

Oct 6 (Reuters) - The benchmark S&P 500 and the

tech-heavy Nasdaq rose on Monday, building on last week's gains,

as AMD's chip-supply deal with OpenAI highlighted the extent of

investor enthusiasm around AI and offset concerns around the

federal government shutdown.

The equities rally has persisted despite cautious forecasts

and warnings about elevated valuations, especially in tech.

AMD became the latest catalyst after striking a deal

with OpenAI that pushed the chip designer's shares to their

highest in more than a year. The stock was last up 28.8% and the

top performer on the benchmark index.

A recent spree in AI dealmaking has stoked some concern of a

few heavyweights exchanging capital and resources in a closed

ecosystem, but analysts still view the tech sector as a strong

play.

"I do not think we're in a bubble. We do have above-average

valuations but there is a real secular trend and profitability

underlying them," said Brett Mitstifer, chief investment officer

of private banking and wealth management at Flagstar Bank.

At 11:48 a.m. ET, the Dow Jones Industrial Average

fell 80.71 points, or 0.17%, to 46,677.57, the S&P 500

gained 24.73 points, or 0.37%, to 6,740.52 and the Nasdaq

Composite gained 152.57 points, or 0.67%, to 22,933.08.

A data drought triggered by the government shutdown is also

fanning expectations of an interest-rate cut, boosting

valuations. A slew of alternative indicators last week pointed

to tepid hiring, reinforcing bets that the Federal Reserve will

cut rates by 25 bps at its next meeting.

Goldman Sachs expects the military pay date on October 15 to

pressure lawmakers into ending their deadlock. If the shutdown

stretches beyond that date, roughly 1.3 million uniformed

military personnel would go unpaid, the brokerage said.

However, even if a deal is reached, the timeline for

releasing delayed data remains uncertain.

Analysts say that makes the third-quarter earnings season

kicking off next week the true test of the rally. By the end of

October, 68% of companies representing 72% of market cap will

have reported, according to Goldman.

Among stocks, some chip companies such as Marvell Technology ( MRVL )

and Micron Technology ( MU ) gained 2.9% and 3.5%,

respectively. AI-linked firms such as Super Micro Computer ( SMCI )

, Palantir Technologies ( PLTR ) and Oracle

jumped 4.4%, 3.7% and 2.6%, respectively.

The S&P 500 tech sector advanced 0.88%.

Communication services shares fell 0.24%, dragged by a

0.85% drop in Meta Platforms ( META ).

Declines in stocks such as Home Depot ( HD ) and McDonald's

weighed on the Dow.

Tesla gained 4% after it teased an October 7 event,

with investors and analysts anticipating a more affordable EV

model.

Regional bank Comerica ( CMA ) gained 15.5% after Fifth

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

valued at $10.9 billion. Shares in Fifth Third were flat.

Crypto stocks climbed as bitcoin approached all-time

highs. Coinbase Global ( COIN ) rose 1%, Riot Platforms ( RIOT )

jumped 4.9% while Strategy climbed 1.9%.

Advancing issues outnumbered decliners by a 1.26-to-1 ratio

on the NYSE and by a 1.65-to-1 ratio on the Nasdaq.

The S&P 500 posted 39 new 52-week highs and seven new lows

while the Nasdaq Composite recorded 157 new highs and 41 new

lows.

(Reporting by Niket Nishant and Sukriti Gupta in Bengaluru;

Editing by Devika Syamnath)