The S&P 500 Index (PX) (SPY) on Wednesday closed up 0.58%, while the Dow Jones Industrials Index (OWI) (DIA) closed unchanged. The Nasdaq 100 Index (UXX) (QQQ) closed up 1.19%. December E-mini S&P futures (ESZ25) rose 0.60%, and December E-mini Nasdaq futures (NQZ25) increased by 1.17%.
Most stock indexes rallied on Wednesday, with the S&P 500 and Nasdaq 100 posting fresh all-time highs. Strength in semiconductor and AI infrastructure stocks supported gains across the broader market. Optimism that growth in the AI sector and increased spending on artificial intelligence will translate into corporate profits remains a major bullish factor for stocks.
Investors are also encouraged by hopes that a resilient US economy and further Federal Reserve easing will continue to support economic growth.
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**Economic Data Highlights**
US MBA mortgage applications fell 4.7% in the week ended October 3. The purchase mortgage sub-index declined by 1.2%, while the refinancing mortgage sub-index dropped 7.7%. The average 30-year fixed rate mortgage decreased by 3 basis points to 6.43% from 6.46% the prior week.
The minutes from the September 16-17 FOMC meeting exhibited a hawkish tone, noting, “Most policymakers judged that it would be appropriate to ease policy further over the remainder of the year,” but a “majority of participants emphasized upside risks to their outlooks for inflation.”
The US government shutdown, now in its second week, continues to weigh on market sentiment and delay key economic reports — including the August US trade report and the monthly payroll report. A prolonged shutdown could also delay the government’s inflation data, scheduled for release on October 15.
The White House has warned that an extended shutdown could trigger widespread dismissals of federal employees in programs that do not align with President Trump’s priorities. Bloomberg Economics estimates approximately 640,000 federal workers will be furloughed during the shutdown, which may increase jobless claims and push the unemployment rate up to 4.7%.
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**Market Sentiment and Safe-Haven Assets**
The ongoing US government shutdown, expectations of additional Fed easing, President Trump’s criticism of the Fed, and political uncertainty in France and Japan are driving investors toward safe-haven assets such as gold and Bitcoin.
Gold prices soared above $4,000 an ounce to another record high on Wednesday. According to the latest data, the People’s Bank of China added to its gold holdings in September for an eleventh consecutive month.
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**Upcoming Market Focus**
Market participants will be closely watching for any new developments regarding tariffs, trade policies, or attempts by lawmakers to resolve the US government shutdown.
On Thursday, Federal Reserve Chair Jerome Powell will deliver welcoming remarks at a Fed Community Bank Conference. On Friday, the University of Michigan’s October consumer sentiment index is expected to decline by 1.1 points to 54.0.
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**Corporate Earnings Outlook**
Rising corporate earnings expectations provide a bullish backdrop for stocks. According to Bloomberg Intelligence, more than 22% of companies in the S&P 500 have provided guidance for their Q3 earnings results that are expected to beat analysts’ expectations — the highest level in a year.
However, Q3 profits are projected to have increased by only 7.2%, the smallest rise in two years. Additionally, Q3 sales growth is expected to slow to 5.9% from 6.4% in Q2.
The markets currently price in a 93% chance of a 25 basis point rate cut at the next FOMC meeting scheduled for October 28-29.
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**International Markets**
Overseas stock markets settled mixed on Wednesday. The Euro Stoxx 50 closed up 0.64%. China’s Shanghai Composite did not trade and remains closed for the week-long Lunar New Year holiday. Japan’s Nikkei Stock 225 closed down 0.45%.
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**Interest Rates and Bonds**
December 10-year Treasury notes (ZNZ5) closed down by 2 ticks on Wednesday. The 10-year Treasury yield rose 0.4 basis points to 4.127%. Prices gave up early gains in the session after the S&P 500 climbed to a record high, which reduced safe-haven demand for government debt.
Weak demand during Wednesday’s $39 billion auction of 10-year T-notes, which had a bid-to-cover ratio of 2.48 (below the 10-auction average of 2.57), also pressured prices.
European government bond yields moved lower. The 10-year German bund yield dropped to a three-week low of 2.666%, finishing down 3.1 basis points at 2.679%. The 10-year UK gilt yield fell 1.0 basis point to 4.709%.
German industrial production for August fell 4.3% month-over-month, worse than the expected 1.0% decline and the largest drop in nearly 3.5 years.
ECB Governing Council Member Muller commented that the Eurozone economy is slowly picking up and inflation is in line with the ECB’s 2% target. Swaps show only a 1% chance of a 25 basis point rate cut by the ECB at its next meeting on October 30.
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**US Stock Movers**
Chipmakers and AI infrastructure stocks led market gains on Wednesday, supporting the broader rally.
– Advanced Micro Devices (AMD) surged over 11%, leading gainers in the S&P 500 and Nasdaq 100.
– Dell Technologies (DELL) rose more than 9%.
– Super Micro Computer (SMCI) and Marvell Technology (MRVL) increased over 6%.
– Micron Technology (MU) and ON Semiconductor (ON) gained more than 5%.
– ARM Holdings Plc (ARM) and Microchip Technology (MCHP) advanced over 3%.
– NXP Semiconductors NV (NXPI), Applied Materials (AMAT), Broadcom (AVGO), Nvidia (NVDA), and GlobalFoundries (GFS) each closed up more than 2%.
Gold mining stocks moved higher following the surge in gold prices:
– Anglogold Ashanti Plc (AU), Coeur Mining (CDE), and Gold Fields Ltd (GFI) gained more than 3%.
– Newmont (NEM) rose by over 1%.
Additional notable movers include:
– AST SpaceMobile (ASTS) climbed more than 8% after signing an agreement to provide direct-to-cellular connectivity for Verizon customers starting in 2026.
– Confluent (CFLT) rose over 7% after reports that the company is exploring a sale following acquisition interest.
– Rocket Lab (RKLB) gained more than 6% after signing a contract with iQPS to launch three additional satellites.
– Datadog (DDOG) increased over 6% after Bernstein raised its price target to $170 from $147.
– Freeport-McMoRan (FCX) climbed more than 5% following an upgrade by Citigroup to “buy” with a $48 price target.
– Constellation Energy (CEG) rose over 4% after being upgraded to “buy” by Seaport Global Securities.
On the downside:
– Penguin Solutions (PENG) dropped over 15% after forecasting fiscal 2026 sales below consensus estimates.
– Fair Isaac Corp (FICO) declined more than 9%, leading S&P 500 losers, after rival Equifax announced a new mortgage credit scoring service at a discount price.
– Defensive food-producing companies retreated amid the broader market strength:
– Tyson Foods (TSN) fell over 3%.
– J M Smucker (SJM) and General Mills (GIS) dropped more than 2%.
– Kraft Heinz (KHC), Mondelez International (MDLZ), Conagra Brands (CAG), and Campbell Soup Company (CPB) each declined over 1%.
– Live Nation Entertainment (LYV) fell over 3% after announcing a planned $1.3 billion convertible senior notes offering.
– Intercontinental Exchange (ICE) declined over 1% after a price target cut by TD Cowen.
– Edwards Lifesciences (EW) slipped over 1% following a downgrade by Oppenheimer & Co.
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**Earnings Reports (October 9, 2025)**
Companies reporting earnings include:
– Apogee Enterprises Inc (APOG)
– Applied Digital Corp (APLD)
– Byrna Technologies Inc (BYRN)
– Delta Air Lines Inc (DAL)
– Helen of Troy Ltd (HELE)
– Neogen Corp (NEOG)
– Oil-Dri Corp of America (ODC)
– Park Aerospace Corp (PKE)
– PepsiCo Inc (PEP)
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**Disclosure**
On the date of publication, Rich Asplund did not hold positions, either directly or indirectly, in any of the securities mentioned in this article.
All information and data provided herein are for informational purposes only. For more details, please refer to the Barchart Disclosure Policy.
The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of Nasdaq, Inc.
https://www.nasdaq.com/articles/stocks-power-higher-ai-optimism
