(Bloomberg) — Wall Street traders defied calls for a breather after a $15 trillion rally in stocks from April lows, with Nvidia Corp. boosting optimism on artificial intelligence after saying it will invest as much as $100 billion in OpenAI.
While about 300 shares in the S&P 500 fell, the gauge rose toward its 28th record this year. The world’s largest chipmaker led gains in big tech, climbing 4%. The investment is intended to help OpenAI build data centers with a capacity of 10 gigawatts of power using Nvidia’s advanced AI chips to train and deploy OpenAI’s models.
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At a time when equities are yet again at all-time highs on the back of strength in big tech, investors should be “responsibly bullish,” according to Tony Pasquariello at Goldman Sachs Group Inc. He said positioning looks elevated, while the tech rally shows no signs of relenting.
“Do I love the positioning setup and tactical risk/reward? I don’t,” he wrote. “Do I think you should be stepping in front of the US mega cap tech freight train? I don’t.”
Action was relatively muted in the bond market amid this week’s slew of Federal Reserve speakers, a key inflation gauge and a trio of Treasury auctions. The dollar halted a three-day gain.
The crypto world got hit as traders saw more than $1.5 billion in bullish wagers liquidated on Monday. Gold powered to a record.
On Friday, Goldman Sachs Group Inc.’s chief US equity strategist, David Kostin, boosted his three-month price target for the S&P 500 to 6,800. He also boosted six- and 12-month estimates to 7,000 and 7,200, respectively.
The gauge traded near 6,700 on Monday.
“Our forecast for further equity market upside would be consistent with the historical pattern during rate-cut cycles. During the past 40 years, the S&P 500 has generated a 15% median 12-month return when the Fed resumed cutting rates against a backdrop of continued economic growth,” he noted.
Pockets of exuberance are appearing as equity positioning in the US keeps climbing, Deutsche Bank’s Parag Thatte said, adding that it is not yet close to extremes that would suggest lopsided risks of reversal.
“Of course, there are reasons to be mindful, given the current high valuations compared to long-term averages,” said Mark Haefele at UBS Global Wealth Management. “After such a strong recent run, a period of consolidation should not come as a surprise, in our view.”
His base case calls for the S&P 500 to reach 6,800 by June 2026, while in a bull case, he sees the index hitting 7,500.
History shows that rallies similar to the one the market has seen this year are difficult to derail: Since 1950, the S&P 500 has advanced by roughly 5.5% on average in the final four months of the year when it has notched at least 20 records by late August, as it did this year, according to Sam Stovall at CFRA Research.
Those gains could come with a few bumps in the road, Stovall said. Still, “while another retreat in stocks may be looming, traders haven’t expended all of the market’s fuel yet,” he said.
Investor focus is likely to shift to the Fed’s tolerance of sticky inflation in 2026, and away from worries about a weaker labor market, according to Morgan Stanley strategists.
“Should the administration’s intention to ‘run it hot’ play out next year while the Fed cuts rates, revenue and earnings growth could come in much stronger than expected,” the team led by Michael Wilson wrote.
There was no sign of seasonal weakness in the first three weeks of September, but with the Fed’s rate cut in the rearview mirror, the market will be searching for fresh sources of momentum, according to Chris Larkin at E*Trade from Morgan Stanley.
“In the short term, if economic data comes in soft, it may need to be in a ‘Goldilocks’ zone — soft enough for the Fed to continue cutting, but not weak enough to fuel recession concerns — for the market to avoid excessive volatility bumps,” he said.
“Stocks have been bucking the historical September weakness so far, thanks to an extremely favorable setup with Federal Reserve rate cuts, strong earnings, solid economic growth and muted inflation, according to Rick Gardner at RGA Investments.
“The stock market’s strength is making it tougher to put new money to work, as valuations are rising, which makes it all the more important for investors to be selective and bottoms up,” he said.
The Fed’s preferred gauge of underlying inflation likely grew at a slower pace last month, offering policymakers some breathing room to address weakness in the US labor market.
A report on Friday is forecast to show the personal consumption expenditures price index excluding food and energy rose 0.2% in August, compared with 0.3% in July. On an annual basis, the so-called core measure is seen holding at a still-elevated 2.9%.
Several Fed officials are set to speak at public events in the coming week, including Chair Jerome Powell on Tuesday. New Fed Governor Stephen Miran — on a temporary leave from his role as chair of the White House Council of Economic Advisers — as well as Michelle Bowman and Mary Daly are scheduled to offer their thoughts.
Fed Governor Stephen Miran said interest rates are too high and made a case for lowering them aggressively in the coming months to protect the labor market. Fed Bank of St. Louis President Alberto Musalem said he supported last week’s reduction, but sees limited room for more cuts amid elevated inflation.
“Fedspeak this week will highlight the wide dispersion of views on the Committee,” said Oscar Munoz at TD Securities. “We do not expect Powell to change his tone from his FOMC press conference.”
Corporate Highlights:
Oracle Corp. would recreate and provide security for a new US version of TikTok’s algorithm under a deal taking shape to sell the popular Chinese-owned app to a consortium of American investors, a White House official said, addressing a key concern raised by lawmakers in Washington. Oracle on Monday promoted two executives, Clay Magouyrk and Mike Sicilia, to the joint role of chief executive officer. Safra Catz, who has led the company since 2014, will become the executive vice chair of the board. ASML Holding NV’s recent rally got a fresh boost on Monday as Morgan Stanley joined the ranks of the stock’s bulls, signaling that the chip-equipment maker may at last show a major uplift from artificial intelligence demand. Kenvue Inc. slipped as Trump administration officials plan to link the active ingredient in Tylenol to autism on Monday, the Washington Post reported, citing unnamed people familiar with the matter. Pfizer Inc. will pay $4.9 billion for the obesity startup Metsera Inc. in a bid to catch up to rival drugmakers after failing to compete with its own weight-loss medications. T-Mobile US Inc. is promoting Chief Operating Officer Srini Gopalan, to the top job, teeing up a new era for the US’s second-largest wireless carrier as it competes for customers in a market that now also spans home internet and satellite service. Walmart Inc. will start delivering refrigerated prescriptions to homes as the world’s largest retailer looks to expand the reach of its pharmacy and deliveries. MetLife Inc. expects third-period income from its private equity and real estate investments to meet its quarterly target for the first time this year, according to a filing Monday. Keurig Dr Pepper Inc. sank after the owner of Canada Dry and Snapple brands was hit with its only sell rating from BNP Paribas Exane. Compass Inc. agreed to buy Anywhere Real Estate Inc. in a deal that would create a combined company with a roughly $10 billion enterprise value, cementing Compass’s status as the largest residential brokerage in the US. ODP Corp., owner of the Office Depot retail chain, is being acquired by private equity firm Atlas Holdings for about $1 billion. Newly-formed Strive Inc. agreed to acquire Semler Scientific Inc. in a deal that combines two publicly-traded Bitcoin treasury companies. Porsche AG shares fell the most on record after the luxury-car maker scaled back its electric-vehicle plans, correcting an expensive strategy that’s depressed its margins and is dragging down parent Volkswagen AG. Roche Holding AG’s experimental drug giredestrant helped patients with a form of advanced breast cancer live longer without the disease worsening in an advanced trial. BBVA SA raised the value of its takeover bid for Banco Sabadell SA by about 10%, a last-ditch effort to get a deal over the line that’s been delayed by regulatory reviews and government opposition for more than a year. Samsung Electronics Co. jumped after reports it’s won approval from Nvidia Corp. for the use of advanced memory chips, which marks a breakthrough for the Korean technology leader. BYD Co. sank after a report that Warren Buffett’s investment firm offloaded its stake in the Chinese electric-vehicle maker. What Bloomberg Strategists say…
“The balance of risks heading into a big week filled with Federal Reserve speakers tilts toward pricing for additional interest-rate cuts — a scenario that will put a floor under stocks.”
—Kristine Aquino, Managing Editor, Markets Live. For the full analysis, click here.
Some of the main moves in markets:
Stocks
The S&P 500 rose 0.4% as of 1 p.m. New York time The Nasdaq 100 rose 0.5% The Dow Jones Industrial Average rose 0.1% The MSCI World Index rose 0.3% Bloomberg Magnificent 7 Total Return Index rose 0.8% The Russell 2000 Index rose 0.3% Currencies
The Bloomberg Dollar Spot Index fell 0.1% The euro rose 0.4% to $1.1788 The British pound rose 0.3% to $1.3507 The Japanese yen rose 0.1% to 147.75 per dollar Cryptocurrencies
Bitcoin fell 2.3% to $112,707.73 Ether fell 6.8% to $4,173.17 Bonds
The yield on 10-year Treasuries was little changed at 4.13% Germany’s 10-year yield was little changed at 2.75% Britain’s 10-year yield was little changed at 4.71% The yield on 2-year Treasuries advanced two basis points to 3.59% The yield on 30-year Treasuries was little changed at 4.75% Commodities
West Texas Intermediate crude fell 0.2% to $62.53 a barrel Spot gold rose 1.4% to $3,737.40 an ounce ©2025 Bloomberg L.P.