U.S. stock markets closed at a record high on Monday, continuing the trend for three straight days. The Fed rate cut last week and indications of further easing of policies boosted investors’ confidence in risky assets like equities. A major AI deal further strengthened market participants’ sentiment. All three major stock indexes ended in positive territory.
How Did the Benchmarks Perform?
The Dow Jones Industrial Average (DJI) rose 0.1% to close at 46,381.54, marking a new closing high for the index. Notably, 12 components of the 30-stock index ended in positive territory, while 18 finished in negative territory. At the intraday high, the blue-chip index recorded a new all-time high of 46,447.13.
The tech-heavy Nasdaq Composite finished at 22,788.98, rising 0.7% or 157.50 points driven by the strong performance of technology bigwigs. This marked a new closing-high for the index. At the intraday high, the tech-laden index recorded a new all-time high of 22,801.90.
The S&P 500 advanced 0.4% to finish at 6,693.75. This marked the benchmark’s new closing high. At the intraday high, the benchmark index recorded a new all-time high of 6,698.88. Out of the 11 broad sectors of the broad-market index, nine ended in negative territory, while two were in positive territory. The Technology Select Sector SPDR (XLK) gained 1.3% while the Energy Select Sector SPDR (XLE) and the Consumer Staples Select Sector SPDR (XLP) fell 1.8% and 1%, respectively.
The fear gauge, the CBOE Volatility Index (VIX) was up 4.2% to 16.10. A total of 18.65 billion shares were traded on Monday, higher than the last 20-session average of 17.50 billion. Advancers outnumbered decliners on the NYSE by a 1.22-to-1 ratio. On the Nasdaq, a 1.38-to-1 ratio favored advancing issues.
A Major AI Deal
NVIDIA Corp. NVDA — the undisputed global leader of the generative artificial intelligence (AI)-powered graphical processing units (GPUs) — has decided to invest up to $100 billion in ChatGPT founder Open AI to enable the latter to install data centers using the chip behemoths AI-powered GPUs. The NVDA system requires 10 gigawatts of power.
CNBC reported citing NVDA CEO Jensen Huang that 10 gigawatts is equal to between 4 million and 5 million GPUs. This is the amount of chips that NVIDIA will ship this year to Open AI. Huang along with Open AI CEO Sam Altman and President Greg Brockman said “This is a giant project.”
This massive deal once again reaffirmed that the AI frenzy is rock solid enabling stock investors to reap long-term benefits. Following the news, the stock price of NVDA advanced 3.9%. NVDA currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Fed Rate Cut Boosts Confidence
On Sept. 17, the Fed in its FOMC meeting decided on a much-hyped 25-basis-point cut in the benchmark lending rate to reduce it to the range of 4-4.25%. This is the first interest rate cut of 2025.
However, the Fed’s dot-plot has shown two more rate cuts of 25 basis points each this year and one rate cut of 25 basis points in both 2026 and 2027.
A low-interest-rate regime will be beneficial for stock investing as it reduces the discount rate thereby increasing the net present value of equity investment. High-growth sectors such as technology, consumer discretionary and cryptocurrency will benefit the most.
Gold Price Hits Record-High
Gold prices are witnessing a solid northward journey this year, benefiting the stocks associated with yellow metal mining. Gold price has climbed nearly 42% year to date. On Sept. 22, gold futures touched a new all-time high of $3,763.10/ounce. A low market interest rate is beneficial for non-income-bearing bullions like gold.
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NVIDIA Corporation (NVDA): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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