CNBC Daily Open: The Fed spoke, but AI roared

Investors barely flinched Wednesday, despite the release of the Fed minutes and the ongoing U.S. government shutdown.

Discussions on rate cuts and shutdowns seemed to be mere background noise compared to the real force moving markets now, namely, artificial intelligence.

AI stocks such as Nvidia are now masters of the market narrative, driving record highs across the S&P 500 and Nasdaq.

On the flip side, Oracle became the proverbial straw that broke the S&P500’s seven-day winning streak Tuesday stateside. 

But, to paraphrase Spider-Man, with great power, comes great scrutiny. The Bank of England warned that valuations appear “stretched,” particularly for AI companies, adding that equity markets could be particularly exposed should expectations around the impact of AI become less optimistic.

For now, Wall Street remains in hyperdrive, fueled by AI’s promise and the hope that the Fed will keep cutting rates.

Investors may soon need to reckon with whether this AI-fueled rally is built on solid ground or it’s swinging toward a cliff.

Israel, Hamas reach ‘first phase’ plan. U.S. President Donald Trump said that both parties have “signed off” on the first phase of his peace plan. Under the plan, Trump said that all hostages will be released and Israel will withdraw forces to an “agreed upon line.”

Fed sees two rate cuts by end-2025. The central bank’s officials in September were strongly inclined to lower interest rates, with the only dispute seeming to be over how many cuts were coming, meeting minutes released Wednesday stateside showed.

Nvidia CEO surprised at ‘clever’ AMD deal. CEO Jensen Huang said Wednesday that he’s surprised Advanced Micro Devices offered 10% of itself to OpenAI as part of a multibillion-dollar partnership announced earlier this week. “I’m surprised that they would give away 10% of the company before they even built it. And so anyhow, it’s clever, I guess,” he said.

S&P 500 and Nasdaq rebound to record. Both indexes notched new all-time intraday and closing highs Wednesday stateside. The broad index was powered by the information technology, utilities and industrial sectors. Over in Europe, stocks ended higher after the EU proposed slashing its tariff-free steel import quota.

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