By Stephen Culp NEW YORK (Reuters) -Wall Street stocks mostly advanced on Monday, as artificial intelligence-related dealmaking boosted investor sentiment even as the U.S. government shutdown extended through its sixth day. The Nasdaq and the S&P 500 were on course to reach record closing highs, while the blue-chip Dow lingered barely in the red. Chips took the lead after AMD said it would supply AI chips to OpenAI in a deal that could generate tens of billions of dollars in yearly revenue and would allow the ChatGPT creator to buy a stake of up to a 10% in the chipmaker. AMD surged 26.1%, while the broader Philadelphia Semiconductor index rose 3.9%. "The economic backdrop, at least until the government shut down, has been fairly solid," said Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder in New York. "Earnings season is coming up and there are a lot of favorable themes, so the path of least resistance is higher." The federal government remained shuttered for the sixth day as lawmakers idled in a partisan impasse. The shutdown has postponed the release of key economic indicators, forcing investors to rely on secondary, non-government data to gauge the timing and extent of Federal Reserve interest rate cuts. Monetary policymakers have cautioned against rushing to lower the Federal funds target rate as inflation remains high, while others believe signs of softness in the labor market merit rate cuts. Financial markets have priced in an all-but-certain 94.6% chance of a 25 basis point interest rate reduction at the conclusion of the Fed's October meeting. Without new U.S. government data this week, market participants are monitoring reports on outstanding consumer credit, mortgage demand and the University of Michigan's preliminary take on October consumer sentiment. The Dow Jones Industrial Average fell 28.56 points, or 0.06%, to 46,729.72, the S&P 500 gained 32.63 points, or 0.49%, to 6,748.42 and the Nasdaq Composite rose 186.15 points, or 0.82%, to 22,966.16. Among the 11 major sectors of the S&P 500, tech and consumer discretionary led the gainers, while consumer staples suffered the steepest percentage decline. Next week, investors will find catalysts as third-quarter earnings season gets underway, with results from large U.S. banks launching the festivities. Analysts estimate aggregate year-on-year S&P 500 earnings growth of 8.8% for the July-to-September period, up 0.8 percentage points from projections at the beginning of the quarter, according to LSEG data. Tesla advanced 4.4% after the electric carmaker teased an event scheduled for Tuesday on social media platform X over the weekend. TD Cowen cut its Starbucks price target, citing a weakening labor market affecting Generation Z, sending the coffee chain's shares down 4.2%. Bitcoin breached the $125,000 mark on Sunday, sending crypto-related firms Coinbase, Strategy, Riot Platforms and MARA Holdings all gained ground. Regional bank Comerica gained 14.3% after Fifth Third said it will buy the company in an all-stock deal valued at $10.9 billion. Verizon shares dipped 4.8% after the telecommunications company named former PayPal boss Dan Schulman as its new chief executive officer. Advancing issues outnumbered decliners by a 1.24-to-1 ratio on the NYSE. There were 547 new highs and 67 new lows on the NYSE. On the Nasdaq, 2,731 stocks rose and 1,885 fell as advancers outnumbered decliners by a 1.45-to-1 ratio. The S&P 500 posted 43 new 52-week highs and eight new lows while the Nasdaq Composite recorded 172 new highs and 48 new lows. (Reporting by Stephen Culp; Additional Reporting by Niket Nishant and Sukriti Gupta in Bengaluru; Editing by Richard Chang)
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