The Dow Jones Industrial Average (DJIA) started the week on a weaker note, falling around 200 points on Monday as investors rotated toward large-cap technology stocks.
The index briefly slipped below the 47,250 mark for the first time in more than a week, underperforming the broader market as gains remained concentrated among the so-called “Magnificent 7.”
Tech heavyweights drive market momentum
Amazon (AMZN) led the rally, jumping about 5% after announcing a $38 billion investment in OpenAI, the developer behind ChatGPT. Data center provider Iren (IREN) also surged following news of a $9.7 billion deal with Microsoft to expand hardware capacity in support of artificial intelligence (AI) infrastructure. Nvidia (NVDA), the world’s leading chipmaker, gained 3.7% as both deals are expected to drive additional demand for its high-performance GPUs.
The tech-driven surge lifted the Nasdaq Composite and S&P 500, while the Dow lagged, weighed down by underperformance in more traditional industrial and financial names.
ISM data highlights ongoing manufacturing weakness
Fresh data from the Institute for Supply Management (ISM) showed US manufacturing activity contracting for an eighth consecutive month.
The ISM Manufacturing PMI fell to 48.7 in October, down from 49.1 in September and below expectations of 49.5. While some demand components improved modestly, all remained in contraction territory, underscoring persistent caution among buyers and subdued factory output.
The report reinforces concerns that higher borrowing costs and slowing global demand continue to pressure US manufacturers, with firms struggling to secure new orders or expand existing operations.
Fed communication grows increasingly divided
Recent remarks from Federal Reserve (Fed) officials have added a layer of uncertainty to the outlook for monetary policy. Chair Jerome Powell struck a notably cautious tone at last week’s policy meeting, signaling that the central bank may slow the pace of rate cuts as it monitors inflation risks.
Notably, the Fed’s decision last week featured a rare split vote, with some policymakers favoring a steeper rate cut and others advocating for no change at all. This divergence has rattled markets, which had grown accustomed to a unified messaging approach from the central bank.
Market expectations shift for December rate decision
According to the CME FedWatch tool, markets currently assign roughly a 65% probability of another 25-basis-point rate cut at the Fed’s December 10 meeting.
However, an increasing number of traders now expect the central bank to delay additional easing until early 2026, as officials weigh signs of persistent inflation against weakening manufacturing data.
Despite the uncertainty, risk appetite remains concentrated in the tech sector, with AI-related investments continuing to drive the market narrative even as the Dow struggles to keep pace.
