U.S. stock markets saw broad gains on Monday, with the technology sector leading the way after Nvidia announced a major strategic investment in OpenAI. The Dow Jones Industrial Average, S&P 500, and Nasdaq Composite all advanced, building on record highs set in the previous session.
Key Takeaways
- Nvidia revealed a plan to invest up to $100 billion in OpenAI to develop next-generation AI data centers.
- Apple's stock increased by over 4% following reports of strong pre-order demand for its new iPhone 17.
- Major indexes, including the Dow, S&P 500, and Nasdaq, closed higher, driven by technology and utility stocks.
- Federal Reserve officials expressed caution regarding future interest rate cuts, signaling a measured approach to monetary policy.
Nvidia and OpenAI Announce Landmark Partnership
Nvidia's stock price increased significantly after CEO Jensen Huang confirmed a substantial investment in the artificial intelligence firm OpenAI. The partnership involves a commitment of up to $100 billion to construct advanced AI infrastructure.
The funds will be allocated to build Nvidia-powered systems that require a minimum of 10 gigawatts of power. This infrastructure is equivalent to deploying between four and five million graphics processing units (GPUs) and will support OpenAI's future AI data centers.
"This is monumental in size," Huang stated during a media appearance. "There's never been an engineering project, a technical project of this complexity and this scale."
The investment will be made incrementally as each gigawatt of power capacity is deployed. OpenAI CEO Sam Altman commented that the outcomes from this collaboration will be remarkable in ways that are difficult to predict today.
Project Details
The initial phase of the project is scheduled to become operational in the second half of next year. It will utilize Nvidia's upcoming Vera Rubin platform, a next-generation architecture for AI systems.
Following the news, Nvidia's stock approached a flat base buy point of $184.48. The company holds a top-tier IBD Composite Rating of 99, reflecting its strong market performance and financial health.
Technology Sector Drives Market Gains
The broader stock market experienced a positive session on Monday. The tech-heavy Nasdaq Composite rose by 0.7%, while the S&P 500 gained 0.5%. The Dow Jones Industrial Average recorded a more modest increase of 0.2%.
Apple Stock Rises on Strong iPhone Demand
Apple was a standout performer in the Dow Jones index, with its stock climbing more than 4%. The surge was attributed to early reports indicating high consumer demand for the newly released iPhone 17 series.
Analysts noted that shipping dates for the new models are more extended compared to previous releases, suggesting that demand is currently outpacing supply. Wedbush analyst Dan Ives increased his price target for Apple stock to $310, citing strong initial demand in Asia.
"We believe supply checks in Asia will result in production increases of roughly 20% for base iPhone 17 and Pro models," Ives wrote in a research note. "Tracking shipping times we are seeing particularly strong demand for iPhone 17 Pro models which is a positive sign for Apple."
Market Context
The market's positive performance came alongside stable economic indicators. The 10-year Treasury yield held at 4.14%, and West Texas Intermediate crude oil futures traded near $62.65 per barrel. Small-cap stocks also performed well, with the Russell 2000 index gaining 0.6%.
Other Notable Tech Movers
Several other technology and e-commerce companies saw significant stock movements:
- Shopify (SHOP): The e-commerce platform's stock cleared a key technical entry point of $156.85. The company has a strong IBD Composite Rating of 96 and has seen its stock rise approximately 48% year-to-date.
- Oracle (ORCL): Shares rose over 4% after the company announced a leadership transition. Safra Catz moved from CEO to executive vice chair, with Clay Magouyrk and Mike Sicilia appointed as new co-CEOs. The company recently projected its cloud-infrastructure revenue would grow 77% this fiscal year.
- Tesla (TSLA): The electric vehicle manufacturer's stock gained nearly 1% in premarket trading after Piper Sandler raised its price target from $400 to $500.
Corporate Acquisitions and Federal Reserve Outlook
Activity in the healthcare sector and comments from Federal Reserve officials also influenced market sentiment. The week is expected to bring new inflation data that could shape future monetary policy.
Pfizer to Acquire Metsera in Multi-Billion Dollar Deal
In a major healthcare development, Pfizer announced its agreement to acquire Metsera, a company focused on obesity treatments. The cash deal is valued at up to $4.9 billion, with the potential to reach $7.3 billion through contingent value rights.
Pfizer stated that Metsera's portfolio includes promising oral and injectable drug candidates for weight management. Following the announcement, Metsera's stock surged by 63%, while Pfizer's shares increased by nearly 3%.
Fed Officials Signal Cautious Stance on Rate Cuts
After a recent 25-basis-point rate cut, Federal Reserve officials have indicated a cautious approach to further easing. St. Louis Fed President Alberto Musalem described last week's cut as a "precautionary move" and noted there is "limited room for easing further."
Separately, Atlanta Fed President Raphael Bostic told the Wall Street Journal he is concerned about persistent inflation and is not currently in favor of another rate cut in October. These comments suggest that the central bank will remain data-dependent in its upcoming decisions.
Upcoming Economic Data
Investors are awaiting the release of the core personal consumption expenditures (PCE) price index on Friday. This is the Federal Reserve's preferred measure of inflation. Economists forecast a 0.22% monthly increase, which would bring the 12-month core inflation rate to 3%.
As the market digests these developments, investors continue to monitor key stocks nearing technical buy points, including aerospace firm Howmet Aerospace (HWM) and electronics manufacturer Jabil (JBL), which is set to report earnings later this week.
