Stocks hit records as Fed cuts bets fuel AI rally amid data gaps

U.S. stocks pushed to fresh records in early October as investors wagered that Federal Reserve interest rate cuts are increasingly likely, with technology and semiconductor firms driving gains even as a partial government shutdown limited the flow of economic data. The S&P 500 and Nasdaq Composite hit intraday and closing highs this week, while the Dow Jones Industrial Average also finished higher, reflecting a fifth consecutive session of gains for major indexes and buoyant sentiment around artificial intelligence spending.

Traders said a softer labor market outlook and rising odds of policy easing have outweighed concerns tied to the government shutdown, which has delayed routine economic releases. Treasury yields moved lower as bond prices rose, with the 10 year Treasury yield trading around 4.09 percent at points during the week, as markets priced in the possibility of rate cuts in October and December. Market participants cautioned that the shutdown’s persistence could complicate Fed decisionmaking by removing key data from the calendar.

"I think they will look at the fact that the trend in the jobs market continues to be weak, which is one of their mandates that they're...