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Indexes: S&P 500 up 0.13%, Nasdaq up 0.38%, Dow down

0.47%,

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AMD soars after OpenAI deal

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Tesla up after teasing Tuesday event

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Critical Metals surges on potential Washington stake

(Updates after markets open)

By Niket Nishant and Sukriti Gupta

Oct 6 (Reuters) - The S&P 500 and the 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 a prolonged federal government

shutdown.

The equities rally has persisted despite cautious forecasts

and warnings about elevated valuations, especially in tech.

"The dollar amounts around these partnerships and around the

buildout of the infrastructure to support AI are getting to be

really astounding," said Leah Bennett, chief investment

strategist at Concurrent Asset Management.

AMD became the latest catalyst when the chip

designer's shares soared to a more than one-year high following

the OpenAI deal. The stock was last up 26.6% and the top

performer on the benchmark index.

Some chip companies rose, with Marvell Technology ( MRVL )

and Micron Technology ( MU ) gaining 4.2% and 5.5%,

respectively. AI server maker Super Micro Computer ( SMCI ) was

up 6.3%.

AI-linked firms advanced: Palantir Technologies ( PLTR )

jumped 5%, while Oracle gained 2.3%.

A broader semiconductor index hit a record high,

last up 3.8%, while AMD rival Nvidia ( NVDA ) declined nearly

1%.

At 09:59 a.m. ET, the Dow Jones Industrial Average

fell 218.34 points, or 0.47%, to 46,540.49, the S&P 500

gained 8.59 points, or 0.13%, to 6,724.38 and the Nasdaq

Composite gained 85.46 points, or 0.38%, to 22,865.97.

The S&P 500 tech sector advanced 0.6%.

Communication services shares fell 0.47%, dragged by

losses in Meta Platforms ( META ), down 1.9%.

Declines in stocks such as Home Depot ( HD ) and

McDonald's weighed on the Dow.

While the standoff in Washington has delayed the release of

the closely watched nonfarm payrolls report, a slew of

alternative indicators last week pointed to tepid hiring,

reinforcing expectations 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, increasing the

likelihood that the Fed will be operating with limited

visibility into the economy at its upcoming meeting.

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.

"While the government shutdown is the focus now, earnings

and the Fed will soon take center stage. For as much noise as

there is, these fundamentals are key catalysts for investors,"

said Bret Kenwell, U.S. investment analyst at eToro.

Among stocks, Tesla gained 2% after the electric

vehicle-maker teased an event scheduled for Tuesday on social

media platform X over the weekend.

Comerica ( CMA ) gained 13.9% after Fifth Third

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

$10.9 billion. Shares in Fifth Third declined 1.5%.

Crypto stocks gained with bitcoin near all-time

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

jumped 4.9% while MARA Holdings ( MARA ) climbed 3.7%.

Declining issues outnumbered advancers by a 1.01-to-1 ratio

on the NYSE, while on the Nasdaq advancing issues outnumbered

decliners by a 1.24-to-1 ratio.

The S&P 500 posted 28 new 52-week highs and six new lows

while the Nasdaq Composite recorded 121 new highs and 27 new

lows.

(Reporting by Niket Nishant and Sukriti Gupta in Bengaluru;

Editing by Devika Syamnath)