AI Stocks Power Nasdaq, S&P 500 Amid Broader Market Struggles

What Happened

Wall Street just wrapped up a wild Monday, November 3, 2025. The S&P 500 and Nasdaq Composite managed to climb higher, but don't let those green numbers fool you. It was mostly thanks to a handful of powerhouse artificial intelligence stocks, particularly Amazon and other key players in the machine-learning space.

While the S&P 500 eked out a 0.2% gain and the tech-heavy Nasdaq jumped 0.5%, the broader market was a mess. The Dow Jones Industrial Average, representing 30 large U.S. companies, shed about 225 points, or 0.5%. This split performance highlights a growing bifurcation, where the AI sector charges ahead while other parts of the economy are stuck in the mud.

The AI Fuel

The day's biggest headline, undoubtedly, was Amazon's colossal $38 billion deal to provide cloud infrastructure for OpenAI. This sent shares of the e-commerce titan surging and gave a significant boost to other generative AI beneficiaries like Nvidia and Palantir Technologies, which also ended the day as top performers.

These gains by a select few Big Tech and AI-focused firms masked a less stellar reality. The rest of the market, still basking in October's glow (the best since 2022), largely struggled. Sectors like communication services, materials, and real estate were the major laggards, indicating a broad-based lack of enthusiasm outside of the AI frenzy.

Economic Headwinds and Other News

Adding to the mixed sentiment was a weaker-than-expected report from the Institute for Supply Management's (ISM) manufacturing survey. Mizuho's Daniel O'Regan noted this update sparked an early slide in stocks, suggesting that tariffs continue to be a drag on U.S. manufacturing. Meanwhile, the U.S. government shutdown entered its 34th day, teetering on the brink of becoming the longest in history if it extends past Tuesday evening.

In other market moves, Treasury yields were a bit of a mixed bag: the 2-year note yield dipped below 3.6%, while the 10-year yield climbed to 4.1%. Gold started the week on a higher note, but cryptocurrencies like Bitcoin and XRP took a hit, largely due to lingering doubts about potential U.S. rate cuts. On the energy front, oil prices rose after OPEC+ agreed to pause output hikes early next year.

Our Take

This market feels like it's riding two different rollercoasters. One, a high-octane AI express, powered by massive deals and speculative fervor. The other, a creaky old wooden coaster, grinding along with traditional economic concerns like manufacturing woes and government gridlock. The massive capital flows into AI, exemplified by the Amazon-OpenAI deal, are undeniably moving the needle for major indices. But relying on a handful of tech giants for market leadership creates a precarious situation; a correction in this concentrated sector could have outsized ripple effects.

Furthermore, the government shutdown, while momentarily overshadowed by AI hype, is a slow-burn risk. A prolonged shutdown could erode business confidence and potentially impact future economic data, adding another layer of uncertainty to an already complex market. It’s a classic case of the market focusing on the shiny new toy while fundamental economic challenges simmer beneath the surface.

Looking Ahead

Get ready for a busy earnings season. Hundreds of tech companies are set to report this week, with Palantir particularly in the spotlight. These reports will either validate the current AI enthusiasm or inject a dose of reality. Investors will be scrutinizing whether these companies can translate technological advancements into tangible financial gains, especially as the broader economic landscape remains murky. Don't pop the champagne just yet; November promises to be anything but dull.