U.S. Stocks Supported by Deals and AI Momentum
Monday brought a dose of optimism to investors: the S&P 500 rose 0.10%, the Nasdaq gained 0.37%, while the Dow Jones slipped 0.52%. The market was lifted by large-scale M&A announcements and renewed enthusiasm for artificial intelligence. OpenAI signed a $38 billion deal with Amazon to secure AWS cloud capacity—sending tech shares higher across the board.
Big M&A Deals Energize the Market
M&A activity reached its highest level of the quarter. Kimberly-Clark announced a $40 billion acquisition of Tylenol-maker Kenvue through a mix of stock and cash. While Kenvue shares surged 12%, Kimberly-Clark dropped more than 14% on investor concerns about the deal’s scale. Eaton also agreed to buy Boyd’s thermal division for $9.5 billion in a bet on data-center infrastructure.
Mixed Messages from the Federal Reserve
Traders closely followed comments from Federal Reserve officials. Governor Stephen Miran said policy is “too restrictive” and current rates are “well above neutral.” Lisa Cook warned of labor-market weakness but avoided committing to a December rate cut. Meanwhile, Chicago Fed President Austan Goolsbee said inflation remains his main concern, although he expects rates could “come down a fair amount” over time.
Futures now price in a 66% chance of a 25-basis-point rate cut at the December 9–10 meeting.
Weak Macro Data Temper Enthusiasm
The ISM Manufacturing Index fell to 48.7, signaling contraction for the eighth straight month. However, the prices-paid component dropped to 58, suggesting easing inflation pressure. In contrast, S&P Global’s PMI was revised upward to 52.5, indicating modest growth in factory activity.
Legal and Political Factors on the Radar
Investors are also eyeing the Supreme Court’s upcoming hearing on the legality of tariffs imposed under President Trump. If the court upholds lower rulings, the government could be forced to refund over $80 billion in tariffs—potentially limiting executive trade powers going forward.
Earnings Season: Better Than Expected
Over 80% of S&P 500 companies have beaten earnings forecasts so far, setting up the strongest reporting season since 2021. However, year-over-year profit growth has slowed to 7.2%, the smallest in two years, with revenue up only 5.9%.
Government Shutdown Drags Into Sixth Week
The ongoing U.S. government shutdown continues to weigh on the economy and delay data releases. Economists warn that prolonged disruption could weaken consumer spending and job growth, increasing pressure on the Fed to ease policy.
Market and Corporate Highlights
Tech megacaps were mixed. Amazon jumped 4% on the OpenAI deal; Nvidia climbed 2.2% after Loop Capital raised its target to a record-high valuation. Alphabet gained 0.9% amid plans for a $15 billion bond issuance, while Meta fell 1.6%.
Among Dow components, Merck (-4.1%) and Nike (-3%) led declines. Rising Treasury yields also pressured energy stocks, with the 10-year yield ticking up to 4.1%.
Bitcoin dropped 2.6%, dragging crypto-related stocks lower—Coinbase (-3.9%) and Marathon (-2.5%)—though Riot Platforms rose 5%.
The U.S. market remains caught between optimism over AI-driven growth and concerns about economic slowdown. With the Fed preparing for its December meeting and the government shutdown unresolved, investors are focused on earnings momentum and signals about future monetary policy.
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Twitter: @BigStakeTrades