By Reuters
NEW YORK: Most major stock indexes climbed on Monday following news that Amazon.com will supply cloud-computing services to OpenAI, and the dollar rose to a three-month high versus the euro due to waning expectations for hefty US interest rate cuts.
The Federal Reserve last week eased rates as expected, but Chair Jerome Powell said another cut in December was "not a foregone conclusion," contrary to some investors' view that it was essentially a done deal. Fed officials on Monday continued to give conflicting views on where the economy stands and the risks facing it, a debate set to intensify as the ongoing US government shutdown prevents the release of official data.
Traders are pricing in a roughly 70 per cent chance of a 25 basis point cut in December, down from about 94 per cent a week ago.
The multi-year US$38 billion Amazon-OpenAI deal provided support to equities, with Amazon's stock ending 4 per cent higher.
"We're still looking at this as a market driven by the technology revolution that is certainly in full swing given AI," said Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder in New York.
"I don't see that slowing down at all. The bigger companies have these massive R&D budgets that are just going to keep cranking out new things. We will continue to see that for the foreseeable future."
TRUMP'S TARIFFS The US Supreme Court is considering the legality of President Donald Trump's global tariffs, with arguments set for Wednesday. Under one legal authority or another, Trump's tariffs are expected to stay in place long-term.
The Dow Jones Industrial Average fell 226.19 points, or 0.48 per cent, to 47,336.68, the S&P 500 rose 11.77 points, or 0.17 per cent, to 6,851.97 and the Nasdaq Composite climbed 109.77 points, or 0.46 per cent, to 23,834.72.
MSCI's gauge of stocks across the globe rose 1.47 points, or 0.15 per cent, to 1,007.70.
The pan-European STOXX 600 index rose 0.07 per cent.
Investors will also get more quarterly results from technology companies this week.
After the closing bell, shares of data analytics company Palantir Technologies were up about 1 per cent as the company reported results and forecast fourth-quarter revenue above analysts' estimates. Advanced Micro Devices, Qualcomm, Uber and McDonald's are also due to report this week.
US megacap companies delivered a mixed bag of results last week, and investors are looking for a return on the extensive capital spending on AI.
DOLLAR GAINS AGAINST MAJOR CURRENCIES
The dollar extended its gains from last week against the euro amid doubts about the outlook for another Fed rate cut this year. The euro, which slipped as low as US$1.1505 against the dollar, its weakest since August 1, pared losses to trade down 0.1 per cent at US$1.152225.
That followed Institute for Supply Management data showing US manufacturing contracted for an eighth straight month in October as new orders remained subdued, and suppliers were taking longer to deliver materials to factories against the backdrop of tariffs on imported goods.
The dollar index, which measures the greenback against a basket of currencies, rose 0.08 per cent to 99.89. Against the Japanese yen, the dollar strengthened 0.13 per cent to 154.2.
Sterling weakened 0.12 per cent to US$1.3135, ahead of a Bank of England rate decision later this week.
Cryptocurrency bitcoin was down 2.6 per cent at US$107,152.
US Treasury yields rose amid high corporate debt issues and as the government bond market kept last week's bearish tone.
The Treasury Department released its quarterly borrowing estimate of US$569 billion in the fourth quarter, US$21 billion less than its July estimate.
The benchmark 10-year yield was last at 4.107 per cent, slightly higher than late last week. The two-year yield of 3.6 per cent was almost unchanged from Friday. The closely watched part of the yield curve that plots two-year and 10-year Treasuries steepened to 51 basis points.
US crude rose 7 cents to settle at US$61.05 a barrel, while Brent crude futures rose 12 cents to US$64.89.
Investors weighed news that OPEC+ plans to end its supply increases. Spot gold fell 0.03 per cent to US$4,000.26 an ounce.
Source: stock-indexes-gain-after-amazon-openai-deal-dollar-rise-3-month