The global financial markets are experiencing significant shifts, highlighted by a growing divergence in AI investment trends and persistent economic uncertainties. AI-driven gains are widening market gaps, with the Dow Jones Industrial Average (DJIA) declining by 200 points and testing below 47,250, while AI-focused companies like Amazon (AMZN) rallied approximately 5% after a $38 billion investment in OpenAI, and Nvidia (NVDA) climbed 3.7% due to hardware demand. Data center supplier Iren secured a $9.7 billion deal with Microsoft, underscoring the concentration in AI sectors.
Meanwhile, the U.S. manufacturing sector shows ongoing weakness, with the Institute for Supply Management (ISM) Purchasing Managers Index (PMI) for October dropping to 48.7, marking the eighth consecutive month of contraction. Sub-indices like Production (48.2), New Orders (49.4), and Employment (46) remain in contraction territory, though the S&P Global US Manufacturing PMI improved to 52.5, signaling some expansion.
The Federal Reserve's monetary policy has introduced market uncertainty, with a shift from consensus to divided opinions, including a rare three-way vote. Officials like Governor Lisa Cook and President Mary Daly supported recent rate cuts, citing job market risks, but expectations for a December cut are in question. Traders price over 65% odds for a cut on December 10, yet many anticipate a delay until January. This cautious stance has supported the U.S. Dollar Index (DXY), which advanced for the fourth consecutive day.
Upcoming economic events include high-impact data from the Reserve Bank of Australia (RBA) and European Central Bank (ECB) speeches, with key indicators like the U.S. Services PMI and employment reports likely to influence market dynamics. In commodities, oil prices face volatility due to OPEC+ output adjustments and geopolitical risks, while gold steadies near $4,000 amid reduced Fed cut expectations and China's tax policy changes affecting demand.
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