US STOCKS-S&P 500, Nasdaq boosted by Amazon-OpenAI deal; Fed path forward grows murky

By Stephen Culp

Nov 3 - The S&P 500 and the Nasdaq advanced on Monday, with artificial intelligence-related deals driving much of the gains even as the Federal Reserve's near-term monetary policy grew increasingly foggy due to scarcity of official U.S. economic data.

Tech and tech-related firms helped boost the Nasdaq into the lead, while healthcare companies UnitedHealth Group UNH.N and Merck MRK.N were off 3.0% and 3.1%, respectively, dragging the Dow into negative territory.

Among the major drivers to the upside, Amazon AMZN.O announced it struck a $38 billion deal with OpenAI to allow the ChatGPT maker to run and scale its artificial intelligence workloads on Amazon Web Services' cloud infrastructure. Amazon's stock advanced 4.4%.

Nvidia shares NVDA.O gained 3.2% after U.S. President Donald Trump said the AI chipmaker's most advanced microchips will be reserved for U.S. companies and kept out of China and other countries.

The Philadelphia SE Semiconductor index .SOX was up 0.8%.

"We have been seeing fewer and fewer companies keep up with the tech trade," said Sam Stovall, chief investment strategist of CFRA Research in New York. "With breadth getting narrower and narrower, you do sort of wonder if the momentum and the participation is there."

"The market is getting long in the tooth," Stovall added. "Investors are of the mindset that maybe we are due for some sort of digestion of gains."

Kimberly-Clark KMB.O shares slid 14.0% after it was revealed the consumer goods company will buy Tylenol maker Kenvue KVUE.N for more than $40 billion. Kenvue advanced 13.9%.

While official economic data remains scarce amid the ongoing government shutdown, the Institute for Supply Management and S&P Global released their purchasing managers' indexes, which showed U.S. factories continue to grapple with uncertainty stemming from Trump's tariff policies.

The U.S. Supreme Court is expected to hear arguments pertaining to the legality of Trump's tariffs on Wednesday.

In the wake of last week's expected interest rate cut, the Fed's next move has become increasingly unclear given the lack of economic indicators due to the ongoing government shutdown. Payrolls processor ADP's National Employment index, expected on Wednesday, could shed light on the state of the U.S. labor market.

Fed officials offered conflicting viewpoints, with Fed Governor Stephen Miran making the case for additional rate cuts, but Chicago Fed President Austan Goolsbee said he was leery of additional cuts while inflation remains well above the central bank's 2% annual target.

The Dow Jones Industrial Average .DJI fell 201.12 points, or 0.42%, to 47,361.75, the S&P 500 .SPX gained 16.06 points, or 0.24%, to 6,856.31 and the Nasdaq Composite .IXIC gained 135.22 points, or 0.57%, to 23,860.54.

Of the 11 major sectors in the S&P 500, consumer discretionary .SPLRCD and tech .SPLRCT enjoyed the only gains, while materials suffered the largest percentage loss.

Third-quarter earnings season is well underway, with well over 300 of the companies in the S&P 500 having reported. Of those, 83% have beaten analysts' estimates, according to the most recent LSEG data.

Declining issues outnumbered advancers by a 1.57-to-1 ratio on the NYSE. There were 149 new highs and 131 new lows on the NYSE.

On the Nasdaq, 1,733 stocks rose and 2,895 fell as declining issues outnumbered advancers by a 1.67-to-1 ratio.

The S&P 500 posted 14 new 52-week highs and 31 new lows while the Nasdaq Composite recorded 67 new highs and 163 new lows.