Everything to Know about Macro and Markets
Stock indexes ended mixed on Friday, as macro and markets news and reports drove sentiment in different ways. Still, all three indexes finished the week in the green, with the Dow Jones Industrial Average (DJIA) rising 1.10%, the S&P 500 (SPX) gaining 1.09%, and the Nasdaq-100 (NDX) jumping 1.15%. All three major averages hit record highs intraday, but only S&P 500 and the DJIA notched fresh all-time highs at close on Friday, as a rally in the Nasdaq-100 was dragged down by declines in several key tech names.
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AI Momentum
Stocks continued to be largely unfazed by the U.S. government shutdown dragging into its third day, as traders bet it would be short-lived, while private data continued to support the outlook for further Federal Reserve rate cuts. Investors continued to pile into the AI names, with the narrative supported by a burst of new partnerships and potential deals signaling that investments in the technology are slated to continue soaring. The news about ChatGPT creator OpenAI reaching a $500 billion valuation – and becoming the most valuable startup in history – added fuel to the fire of the AI-driven rally.
Still, the Nasdaq-100 failed to keep its intraday record, declining below Thursday’s all-time high, with the key pressure factor arriving from a drop in Palantir (PLTR) after a media report on security flaws in its systems. Declines among several large- and megacaps – such as in Meta (META) on product demo failures and safety concerns, in Netflix (NFLX) on consumer boycott, and in Applied Materials (AMAT) on a larger expected hit to revenue from export restrictions than previously communicated – added to the pressures on the large-cap tech index. This has sparked some profit taking in stocks that previously notched strong gains, such as Nvidia (NVDA) – despite broad optimism and strong overall AI sector performance.
Cutting in the Dark
The government shutdown has suspended the September nonfarm payrolls release, and if prolonged, could delay other key reports. Meanwhile, investors are turning to proxies such as ADP and other private sources – which offer insights into the state of the economy and the job market but lack the extensive coverage of the BLS report.
ADP reported a loss of 32,000 private-sector jobs in September, indicating continued weakness in employment. At the same time, ISM Services index fell to 50, indicating stagnation, as business activity shrank for the first time since the pandemic. The weaker-than-expected reports further convinced the markets that the Fed will continue easing its monetary policy despite a data blackout. Futures markets and the CME FedWatch are now both signaling near-certainty for October’s rate decrease and about 80% chance of another cut in December.
Shutdown Tango
The lack of response from the markets to the government shutdown is not surprising, given that these events haven’t been a major headwind for the stock performance in recent decades, with mixed but moderate moves in stock indexes. Over the past 50 years, there have been 22 shutdowns (including the technical ones, lasting less than 24 hours). Most of these events lasted just a few days, having no impact on the broader economy; in hindsight, stock markets were correct in brushing them off. Stock performance over the longer periods of government blackouts was also mixed, generally influenced more by macroeconomic factors than the shutdown itself. Overall, the S&P 500 gained an average of 0.3% during the episodes, according to Carson Group analysis.
Stocks That Made the News
▣ According to Bloomberg report, BlackRock’s (BLK) infrastructure investment platform Global Infrastructure Partners is in advanced talks to acquire Aligned Data Centers in a deal that could be valued at $40 billion. Aligned is a technology infrastructure company specializing in data center solutions for AI and cloud, and is seen as a major beneficiary of AI spending wave.
▣ Netflix (NFLX) logged its biggest weekly drop since April after Tesla (TSLA) CEO Elon Musk continued to urge a consumer boycott over allegations of content inappropriate for kids.
▣ Applied Materials (AMAT) dropped, paring some of its weekly gain, after the company said it expects new U.S. export restrictions to reduce its revenue by approximately $110 million in the fourth quarter of its current fiscal year and by $600 million in fiscal 2026. The projected hit to revenue is larger than previously expected.
▣ Palantir Technologies (PLTR) tumbled 7.5% on Friday after a Reuters article revealed that an internal U.S. Army memo labeled a battlefield communications network prototype platform developed by Palantir and Anduril as “very high risk” due to fundamental security flaws. Palantir quickly refuted the claims, saying that the issues mentioned in the report were already dealt with, and that finding flaws and fixing them is a normal process of new systems rollout. PLTR was off its lows following the company’s response, and futures flashing green signal traders are convinced the sell-off was overdone.
▣ Pfizer (PFE) saw its stock jump after reaching a landmark agreement with the Trump administration. The pharma giant secured a three-year reprieve from tariffs on its products in exchange for slashing U.S. prices for primary care drugs by an average of 50% and pledging a massive $70 billion investment into U.S. research and manufacturing facilities over the next several years.
▣ Tesla (TSLA) reported record Q3 deliveries that topped expectations, but investors still sent the stock lower amid concerns about future demand. Several analysts opined that delivery surge was largely driven by U.S. buyers rushing to purchase EVs before the $7,500 federal tax credit expired on September 30, 2025. Analysts commented that the large delivery jump was likely a temporary effect, reflecting a “sell the news” market setup where investors had already anticipated and priced in the robust numbers. Broader demand concerns, especially due to challenges in Europe and increasing EV competition, also weighed on investor sentiment despite the record quarter.
▣ Nvidia (NVDA) became the first U.S. public company to reach a $4.5 trillion market capitalization last week. Cantor Fitzgerald said Nvidia is its top stock pick in the chip sector, projecting a potential path for the company to exceed a $10 trillion valuation as AI infrastructure spending accelerates. Nvidia’s $100 billion investment in AI startup OpenAI and its dominant role in AI infrastructure – supplying GPUs that power AI data centers and models worldwide – underpin this bullish outlook. Bullish sentiment is further supported by news from Nvidia-backed Perplexity AI, which announced a free global rollout of its AI-powered browser Comet, seen as strengthening Nvidia’s presence and influence in the AI industry.
▣ Alphabet’s (GOOGL) Google will invest $4 billion to develop a new cloud and AI data center in Arkansas, the company’s first facility in the state. Google is working with Entergy Arkansas (ETR) to power the facility, including solar power projects and battery storage, while committing to cover all the energy costs for the data center.
▣ Vertiv Holdings (VRT) – which has made TipRanks Smart Investor Newsletter subscribers a gain of 47% in less than four months, versus 12% for the S&P 500 – surged last week as the continued wave of AI partnerships – such as the new collaboration between Hitachi (HTHIY) and OpenAI – and soaring hyperscaler data center investments boosted the market’s positive outlook on data center suppliers like VRT. Nvidia CEO Jensen Huang recently said that AI capex will hit $3-4 trillion by the end of the decade, with his projections supported by several Wall Street analysts.
▣ International Business Machines (IBM) – another TipRanks Smart Investor holding – continued to rally on quantum-computing leadership. Following HSBC’s (HSBC) announcement about its successful deployment of IBM’s Heron quantum processor to better optimize bond trading, the tech giant is teaming up with Vanguard, the world’s second-largest asset manager, to explore how quantum computing could help build better investment portfolios. IBM is also making bold strides in the AI sphere: over the past two weeks, it has launched a new AI model FlowState designed to make accurate predictions using time-series data; announced a partnership with AMD (AMD) to deliver advanced AI infrastructure to AI unicorn Zyphra; and delivered a powerful AI system to help Norway’s railroad agency detect early signs of track damage.
Upcoming Earnings and Dividend Announcements
U.S. companies have begun reporting their Q3 results last week, although the earnings season will officially open on October 14 with the quarterly releases of large financial and tech corporations. Still, some notable releases are coming this week, too, particularly from Constellation Brands (STZ), McCormick & Company (MKC), Delta Air Lines (DAL), PepsiCo (PEP), and Progressive (PGR).
Ex-dividend dates are coming this week for JPMorgan Chase (JPM), Oracle (ORCL), Verizon (VZ), General Mills (GIS), AT&T (T), Darden Restaurants (DRI), Accenture (ACN), and other dividend-paying firms.
For additional exclusive market insights and content from TipRanks Macro & Markets research analyst Yulia Vaiman, click here.