Stock indexes gain after Amazon-OpenAI deal; dollar rise to 3-month high vs euro

By Caroline Valetkevitch

NEW YORK (Reuters) -Most major stock indexes climbed on Monday following news that Amazon.com will supply cloud-computing services to OpenAI, and the dollar rose to a three-month high versus the euro due to waning expectations for hefty U.S. interest rate cuts.

The Federal Reserve last week eased rates as expected, but Chair Jerome Powell said another cut in December was "not a foregone conclusion," contrary to some investors' view that it was essentially a done deal.

Fed officials on Monday continued to give conflicting views on where the economy stands and the risks facing it, a debate set to intensify as the ongoing U.S. government shutdown prevents the release of official data. Traders are pricing in a roughly 70% chance of a 25 basis point cut in December, down from about 94% a week ago.

The multi-year $38 billion Amazon-OpenAI deal provided support to equities, with Amazon's stock ending 4% higher.

"We're still looking at this as a market driven by the technology revolution that is certainly in full swing given AI," said Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder in New York.

"I don't see that slowing down at all. The bigger companies have these massive R&D budgets that are just going to keep cranking out new things. We will continue to see that for the foreseeable future."

TRUMP'S TARIFFS

The U.S. Supreme Court is considering the legality of President Donald Trump's global tariffs, with arguments set for Wednesday. Under one legal authority or another, Trump's tariffs are expected to stay in place long-term.

The Dow Jones Industrial Average fell 226.19 points, or 0.48%, to 47,336.68, the S&P 500 rose 11.77 points, or 0.17%, to 6,851.97 and the Nasdaq Composite climbed 109.77 points, or 0.46%, to 23,834.72.

MSCI's gauge of stocks across the globe rose 1.47 points, or 0.15%, to 1,007.70.

The pan-European STOXX 600 index rose 0.07%.

Investors will also get more quarterly results from technology companies this week.

After the closing bell, shares of data analytics company Palantir Technologies were up about 1% as the company reported results and forecast fourth-quarter revenue above analysts' estimates. Advanced Micro Devices, Qualcomm, Uber and McDonald's are also due to report this week.

U.S. megacap companies delivered a mixed bag of results last week, and investors are looking for a return on the extensive capital spending on AI.

DOLLAR GAINS AGAINST MAJOR CURRENCIES

The dollar extended its gains from last week against the euro amid doubts about the outlook for another Fed rate cut this year.

The euro, which slipped as low as $1.1505 against the dollar, its weakest since August 1, pared losses to trade down 0.1% at $1.152225.

That followed Institute for Supply Management data showing U.S. manufacturing contracted for an eighth straight month in October as new orders remained subdued, and suppliers were taking longer to deliver materials to factories against the backdrop of tariffs on imported goods.

The dollar index, which measures the greenback against a basket of currencies, rose 0.08% to 99.89. Against the Japanese yen, the dollar strengthened 0.13% to 154.2.

Sterling weakened 0.12% to $1.3135, ahead of a Bank of England rate decision later this week.

Cryptocurrency bitcoin was down 2.6% at $107,152.

U.S. Treasury yields rose amid high corporate debt issues and as the government bond market kept last week's bearish tone.

The Treasury Department released its quarterly borrowing estimate of $569 billion in the fourth quarter, $21 billion less than its July estimate.

The benchmark 10-year yield was last at 4.107%, slightly higher than late last week. The two-year yield of 3.6% was almost unchanged from Friday. The closely watched part of the yield curve that plots two-year and 10-year Treasuries steepened to 51 basis points.

U.S. crude rose 7 cents to settle at $61.05 a barrel, while Brent crude futures rose 12 cents to $64.89.

Investors weighed news that OPEC+ plans to end its supply increases. Spot gold fell 0.03% to $4,000.26 an ounce.

(Additional reporting by Amanda Cooper in London and Ankur Banerjee in Singapore; Editing by Sonali Paul, Himani Sarkar, Emelia Sithole-Matarise, Alexander Smith, Joe Bavier, Aurora Ellis and Richard Chang)