Stocks Rise: AI Frenzy Fuels Chipmaker Gains

On Monday, the S&P 500 Index ($SPX) (SPY) ended the day up +0.36%, while the Dow Jones Industrials Index ($DOWI) (DIA) saw a slight decline of -0.14%. Meanwhile, the Nasdaq 100 Index ($IUXX) (QQQ) climbed +0.78%. December E-mini S&P futures (ESZ25) increased by +0.37%, and December E-mini Nasdaq futures (NQZ25) gained +0.75%.

Overall, stock indexes closed higher yesterday, with the Nasdaq 100 reaching a new all-time high. Advanced Micro Devices experienced a significant surge of over 23% following its monumental partnership with OpenAI, worth several billion dollars, which invigorated the AI sector. There is growing optimism that advancements in artificial intelligence and associated investments will boost corporate profitability, fueling bullish sentiment in the market. Additionally, expectations of a resilient US economy and potential further easing from the Federal Reserve support stock prices.

Increased bond yields on Monday tempered stock gains, with the yield on the 10-year T-note rising +4 basis points to 4.16%. Additionally, shares in Verizon Communications dropped by more than -5%, adding pressure on the Dow. The prolongation of the US government shutdown is now in its second week, affecting investor sentiment and postponing critical economic data releases.

See also Eliminating Waste, Fraud, and Abuse in Medicaid My Administration has been relentlessly committed to rooting out waste, fraud, and abuse in Government programs to preserve and protect them for those who rely most on them. The Medicaid program was designed to be a program to compassionately provide taxpayer dollars to healthcare providers who offer care to the most vulnerable Americans. To keep payments reasonable, billable costs for such care were historically capped at the same level that healthcare providers could receive from Medicare. The State and Federal Governments jointly shared this cost burden to ensure those of lesser means did not go untreated. Under the Biden Administration, States and healthcare providers were permitted to game the system. For example, States "taxed" healthcare providers, but sent the same money back to them in the form of a "Medicaid payment," which automatically unlocked for healthcare providers an additional "burden-sharing" payment from the Federal Government. Through this gimmick, the State could avoid contributing money toward Medicaid services, meaning the State no longer had a reason to be prudent in the amount of reimbursement provided. Instead of paying Medicare rates, many States that utilize these arrangements now pay the same healthcare providers almost three times the Medicare amount, a practice encouraged by the Biden Administration. These State Directed Payments have rapidly accelerated, quadrupling in magnitude over the last 4 years and reaching $110 billion in 2024 alone. This trajectory threatens the Federal Treasury and Medicaid's long-term stability, and the imbalance between Medicaid and Medicare patients threatens to jeopardize access to care for our seniors. I pledged to protect and improve these important Government healthcare programs for those that rely on them. Seniors on Medicare and Medicaid recipients both deserve access to quality care in a system free from the fraud, waste, and abuse, that enriches the unscrupulous and jeopardizes the programs themselves. We will take action to continue to love and cherish the Medicare and Medicaid programs to ensure they are preserved for those who need them most. The Secretary of Health and Human Services shall therefore take appropriate action to eliminate waste, fraud, and abuse in Medicaid, including by ensuring Medicaid payments rates are not higher than Medicare, to the extent permitted by applicable law. This memorandum is not intended to, and does not, create any right or benefit, substantive or procedural, enforceable at law or in equity by any party against the United States, its departments, agencies, or entities, its officers, employees, or agents, or any other person. DONALD J. TRUMP

The ongoing government shutdown has resulted in delays for vital reports, including last week’s monthly payroll data. A continued shutdown could also affect the publication of the inflation statistics set for October 15. The White House has cautioned that an extended shutdown could lead to significant layoffs in governmental sectors outside of President Trump’s strategic priorities. According to Bloomberg Economics, approximately 640,000 federal employees could be furloughed, potentially increasing jobless claims and raising the unemployment rate to 4.7%.

The current US government impasse, combined with expectations for more Fed support and rising political uncertainty in France and Japan, is driving investors toward safe-haven assets, notably gold and Bitcoin. French Prime Minister Lecornu’s resignation follows President Macron’s new cabinet announcement, intensifying uncertainty in the Eurozone’s second-largest economy. In Japan, Sanae Takaichi, a proponent of loose fiscal and monetary policies, has emerged victorious in the LDP party election, positioning her as a potential future prime minister. Consequently, both gold and Bitcoin surged to new all-time highs on Monday, invigorating the so-called “debasement trade” as investors distance themselves from fiat currencies.

Stocks Settle Mostly Higher as AI Frenzy Boosts Chipmakers

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