5 Things to Know Before the Stock Market Opens Tuesday

Here are five key things investors need to know to start the trading day:

The AI landscape witnessed a significant shift yesterday as OpenAI officially announced a custom chip partnership with Broadcom, sending ripples through the market. Shares of Broadcom surged nearly 10% on the news in Monday’s session, reflecting investor enthusiasm, although the stock saw a slight pullback in premarket trading this morning.

The deal, which has been in the works for 18 months, involves the collaborative development and deployment of 10 gigawatts of custom AI accelerators. While the financial specifics remain undisclosed, speculation abounds. Analysts initially pointed to OpenAI as the unnamed $10 billion customer Broadcom alluded to in September. However, Broadcom’s Semiconductor Solutions Group President, Charlie Kawwas, clarified that the mystery client is, in fact, a separate entity, adding another layer of intrigue to the situation.

This strategic move signals OpenAI’s deeper foray into the chipmaking domain, potentially positioning it as a formidable competitor to established hyperscalers. This vertical integration could provide OpenAI with greater control over its AI infrastructure and potentially reduce its reliance on external suppliers like Nvidia and AMD.

The broader chip market also benefited from the positive sentiment surrounding the OpenAI-Broadcom partnership. Companies including Nvidia, Taiwan Semiconductor, On Semiconductor, and Micron Technology all experienced upside in yesterday’s trading, suggesting that the market views this partnership as a positive indicator for the entire sector. Investors are betting on increased demand for specialized AI chips as the technology matures and adoption rates rise.

The tech sector, in general, spearheaded Monday’s market rebound, enabling the S&P 500 to recover a significant portion of Friday’s losses. Oaktree Capital Management co-founder Howard Marks offered a tempered perspective on the AI frenzy, suggesting that while valuations are elevated, they haven’t yet reached bubble territory.

President Donald Trump journeyed to Israel and Egypt yesterday to finalize a peace agreement aimed at ending the conflict in Gaza. He commenced his visit in Tel Aviv, commemorating the release of Israeli hostages held by Hamas following the 2023 invasion. In a statement at the Israeli parliament, Trump proclaimed that the “long and painful nightmare” had concluded for both Israelis and Palestinians.

Despite the declared ceasefire, experts caution against an immediate resumption of shipping activity in the Red Sea. Houthi rebels, responsible for attacks on trade vessels, have indicated their intent to continue targeting maritime routes in the region. This ongoing threat introduces persistent uncertainty for ocean carriers and could continue to impact global supply chains and freight costs.

U.S. rare earth miner stocks are exhibiting continued upward momentum in pre-market trading this morning, building on gains made in Monday’s session. This surge follows China’s recent tightening of export controls on rare earth minerals, prompting President Trump to revive discussions surrounding the U.S.-China trade dynamic.

Beijing’s export restrictions could have significant ramifications for the U.S. defense sector, which relies heavily on these critical minerals for the production of advanced weapons systems. In response, the Defense Department is reportedly expediting efforts to stockpile $1 billion worth of these materials. The U.S.’s lack of its own established rare earth reserve is a point of vulnerability that some, like Jeremy Siegel of the University of Pennsylvania, deem “scandalous.” This underscores the growing strategic importance of securing domestic sources of rare earth minerals to mitigate potential supply chain disruptions.

New car prices have reached record levels, with the average price exceeding $50,000 for the first time in September, according to Cox Automotive. This price surge reflects factors like increased demand, supply chain constraints, and the incorporation of advanced technologies in vehicles.

While affluent consumers are readily absorbing these higher prices, auto loan delinquency rates among individuals with lower credit scores are approaching historical highs. This divergence highlights the increasingly “K-shaped” nature of the U.S. economy, where different segments of the population experience vastly different economic realities. The widening gap between those who can afford new cars and those struggling to repay existing auto loans paints a complex picture of the current economic landscape.