Wall Street powered to new all-time highs Monday, October 28, as technology giants continued their relentless march higher on artificial intelligence optimism while the broader market took a breather following its recent torrid rally. The Dow Jones Industrial Average advanced 0.7% or 337.47 points to close at 47,544.59, marking a new record close, while the tech-heavy Nasdaq Composite finished at 23,637.46, climbing 1.9% or 432.59 points driven by strong performance of AI semiconductor leaders.
The S&P 500 appreciated 1.2% to finish at 6,875.17, reflecting the first closing in its history above the crucial technical barrier of 6,800. The benchmark index’s ability to reach new highs demonstrates that investor appetite for risk remains robust despite warnings from strategists that valuations have reached extreme levels historically associated with market peaks.
Microsoft Corp. finalized a new pact with OpenAI that will give the software giant a 27% ownership stake worth about $135B, cementing the company’s position as the dominant player in commercializing artificial intelligence technology. The deal provides Microsoft with extended access to OpenAI’s models through 2032, ensuring the tech giant maintains its competitive advantage as enterprises increasingly deploy AI solutions across their operations.
Apple Inc. briefly topped $4T while Nvidia Corp. Chief Executive Officer Jensen Huang dismissed concerns about an AI bubble, arguing that investments in artificial intelligence infrastructure represent rational responses to productivity improvements rather than speculative excess. Huang’s confidence reflects the semiconductor industry’s belief that current demand for chips powering AI applications will continue growing for years as enterprises adopt machine learning across business processes.
The major gainer of the index was QUALCOMM Inc., with the stock price of the semiconductor behemoth jumping 11.1% after unveiling a new AI chip for data centers. The announcement demonstrated that artificial intelligence opportunities extend beyond Nvidia and other established players, creating room for additional companies to capture market share in the rapidly expanding data center chip segment.
After the release of benign CPI data for September, investors are expecting more cuts in the interest rate this year, with the CME FedWatch interest rate derivative tool currently showing a 97.8% probability that the Fed will reduce the Fed fund rate by 25 basis points in October and a 92.8% probability that the central bank will further reduce the rate by another 0.25% in December. The delayed economic data release, originally scheduled for October 15th but postponed due to the ongoing government shutdown, showed inflation running slightly cooler than feared.
Conservative investors recognize that the Federal Reserve’s willingness to cut rates despite inflation remaining above target suggests policymakers prioritize supporting economic growth over strict adherence to the 2% inflation objective. This dovish stance creates favorable conditions for equity appreciation, though critics argue that accommodating monetary policy allows valuation excesses to persist longer than would occur under more restrictive policy.
While most shares in the S&P 500 took a breather after a torrid run, tech megacaps kept rising, demonstrating the narrow market leadership that has characterized much of 2025’s advance. The concentration of gains in a handful of technology giants creates vulnerability if these companies disappoint on earnings or face regulatory challenges, though bulls argue that dominant platforms deserve premium valuations.
Bitcoin maintained relative stability during Monday’s equity rally, trading around $112,000 as the cryptocurrency consolidated recent gains following its early October crash from record highs near $126,000. Spot Bitcoin exchange-traded funds saw $202.48M in net inflows on October 28, marking another strong day for institutional demand, with the cumulative total net inflow now standing at $62.34B. The continued institutional buying demonstrates that sophisticated investors view recent price weakness as opportunity rather than signaling fundamental deterioration.
Out of the 12 ETFs, three recorded positive inflows, with Ark & 21Shares leading with $75.84M, followed by Fidelity’s FBTC at $67.05M, and BlackRock’s IBIT with $59.60M. The diversified buying across multiple products suggests broad institutional interest rather than concentrated demand from a single large investor, providing confidence that recent inflows represent sustainable shifts in portfolio allocation.
Spot Ethereum ETFs saw a strong rebound in demand on October 28, recording $246.02M in net inflows, ending their brief slowdown. Ethereum’s renewed attractiveness to institutional investors reflects growing appreciation for the blockchain’s dominance in decentralized finance applications and smart contract functionality. Conservative cryptocurrency investors have increasingly allocated to Ethereum alongside Bitcoin, recognizing that the two assets serve different purposes within digital asset portfolios.
Gold prices consolidated Monday as investors rotated from safe-haven assets into riskier equities following progress toward a U.S.-China trade deal. The precious metal’s weakness demonstrates that geopolitical risk premiums can disappear quickly when tensions ease, leaving investors who purchased gold near recent record highs suffering losses. The volatility in traditionally stable safe-haven assets highlights the challenges facing portfolio managers attempting to protect against tail risks without suffering opportunity costs during risk-on environments.
Treasury yields edged higher as safe-haven demand waned, with the 10-year note hovering near 4.3%. The modest increase in yields provided additional validation that Monday’s equity rally reflected genuine improvement in risk appetite rather than simply technical bounces within an ongoing correction. Bond market participants who positioned for flight-to-quality buying found themselves on the wrong side as investors rotated from fixed income toward equities.
The government shutdown’s extension into its 28th day continued preventing release of key economic data that investors typically rely upon to assess conditions. The information vacuum paradoxically may support stock prices by eliminating potential negative surprises, allowing markets to focus on corporate earnings reports that have generally exceeded analyst expectations. Conservative strategists note that the shutdown’s disruption to government statistics releases creates uncertainty about economic conditions that could eventually weigh on investor confidence if the funding lapse extends significantly longer.
Nvidia just took a $1B equity investment in Nokia, with the strategic partnership and investment expected to create significant value for both companies as Nokia will use the proceeds to accelerate strategic plans to advance trusted connectivity for the AI supercycle. The deal demonstrates that artificial intelligence investments extend beyond pure software and chip companies, creating opportunities for telecommunications infrastructure providers essential to supporting massive data flows required by machine learning applications.
The question facing investors as October concludes is whether Monday’s rally represents healthy leadership rotation toward technology megacaps or concerning concentration that leaves the market vulnerable to sharp reversals. Historical evidence suggests that narrow market leadership eventually broadens or corrects, with intermediate outcomes less common during mature bull markets. The choice facing portfolio managers is whether to chase momentum in expensive technology stocks or maintain defensive positioning that has underperformed throughout 2025.
Bank of America’s warning that 60% of their proprietary bear market indicators are flashing red signals creates cognitive dissonance for investors watching indexes reach new all-time highs. The divergence between price action and valuation metrics suggests either that traditional indicators have lost relevance in an AI-driven economy or that current enthusiasm will eventually face reckoning when earnings growth fails to justify stretched multiples.
The CME FedWatch tool’s overwhelming probability estimates for rate cuts in both October and December provide powerful tailwinds for risk assets, as lower borrowing costs encourage corporate investment and consumer spending. However, the Federal Reserve’s December meeting could disappoint if Chair Jerome Powell signals pause after the October cut, creating potential for sharp reversals if markets have priced excessive monetary accommodation.
Conservative investors should recognize that Monday’s advance creates more challenging entry points for those who remained defensively positioned during October’s volatility. The tradeoff between chasing momentum at elevated valuations versus waiting for pullbacks that may not materialize represents the classic dilemma facing investors during powerful bull markets driven by improving fundamentals and accommodative policy.
As markets prepare for the Federal Reserve’s policy decision and Trump’s high-stakes summit with Xi Jinping, the stage is set for either a powerful continuation of Monday’s rally if events exceed expectations or sharp reversals if reality disappoints compared to optimistic frameworks presented by negotiators. The elevated expectations create vulnerability to sell-the-news reactions even if outcomes prove substantively positive, as traders who bought in anticipation may choose to take profits regardless of achievements.
