S&P 500, Nasdaq end higher as tech strength outweighs Fed concerns

By Stephen Culp NEW YORK (Reuters) -Technology shares boosted U.S. stocks to a higher close on Wednesday as investors, lacking economic data during the government shutdown, looked to minutes from the Federal Reserve's most recent policy meeting for clues to the outlook for interest rate cuts through year-end. The tech-laden Nasdaq was out front, boosted by the artificial intelligence-related megacaps that have led market gains so far this year. The S&P 500 and the Nasdaq eked out new all-time closing highs. Chip stocks were clear outperformers, while energy, consumer staples and homebuilders were the laggards, as a report from the Mortgage Bankers Association showed home loan demand dipped 4.7% last week despite easing interest rates. "The theme continues to be aggressive growth, with a constant supply of deal announcements, one after the other that are related to the AI space," said Bill Merz, head of Capital Market Research at U.S. Bank Wealth Management, Minneapolis. "Anything attached to AI is garnering a significant amount of attention." Amid continuing euphoria surrounding AI, mounting U.S. and geopolitical uncertainty has pushed gold prices above the $4,000 per ounce threshold as investors flock to the safe-haven metal as a hedge against growing risks. "We’ve seen in the last few years that stocks and safe havens can work in conjunction with each other," Merz added. "A part of that comes from this dual reality that … fundamentals, for now, are supporting higher than normal valuation, and simultaneously, deficit spending has to be financed by additional debt." The U.S. government shutdown entered its eighth day, and a congressional stalemate appeared to suggest market participants will lack official economic indicators for the immediate future, leaving markets with little to go on until third-quarter earnings season kicks off next week. In the absence of data, investors looked to third-quarter earnings season to get underway next week and the minutes from the September meeting of the Federal Open Markets Committee (FOMC) for clues as to the central bank's intentions regarding interest rate cuts. Those minutes showed a divided committee, with policymakers concerned about rising labor market risks but still wary of inflation. And while "most judged that it likely would be appropriate to ease policy further over the remainder of this year," the timing and pace of further moves remained an open question. "The topical discussion is about the extent of Fed cuts and how restrictive or not policy is," said Zachary Hill, head of portfolio management at Horizon Investments in Charlotte, North Carolina. "More broadly, the Fed is definitely not in a great position without public sector economic data as (the shutdown) continues to drag on, which really just makes policymakers' already challenging job even tougher." According to preliminary data, the S&P 500 gained 39.58 points, or 0.58%, to end at 6,753.48 points, while the Nasdaq Composite gained 255.02 points, or 1.11%, to 23,041.74. The Dow Jones Industrial Average rose 5.68 points, or 0.01%, to 46,608.66. Datadog rose after Bernstein raised its price target on the cloud security firm, while Intercontinental Exchange fell after Barclays cut its price target on the stock. Fair Isaac Corp fell after credit bureau Equifax said it plans to offer cheaper mortgage credit scores. Surging gold prices helped U.S.-listed shares of gold miners Newmont and Gold Fields gain ground. Dell jumped after multiple brokerages raised their price targets for the stock. Freeport-McMoRan advanced in the wake of Citigroup's upgrade to "buy" from "neutral". Joby Aviation slid after the electric air taxi maker on Tuesday priced a $514 million share sale at a 10.9% discount to its last closing price. AMD extended its gains for the third consecutive day.  (Reporting by Stephen Culp; Additonal reporting by Chibiuke Oguh in New York, and Niket Nishant and Sukriti Gupta in Bengaluru; Editing by David Gregorio)

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