U.S. stock market today surges to record highs: Dow, S&P 500, Nasdaq hit all-time highs on AI momentum, here’s top stocks to watch

U.S. stock market surged to record highs on Friday. The Dow rose 366 points to 46,238, the S&P 500 gained 0.4% to 6,823, and the Nasdaq added 0.1% to 16,215. The Russell 2000 jumped 1.4% to 2,492. Investors are riding strong AI-driven momentum despite a third-day government shutdown. All four benchmarks hit all-time highs. Traders are watching key movers like Johnson & Johnson and USA Rare Earth for potential gains.

The gains put the indexes on track for a positive week. The S&P 500 and Dow are up more than 1% week to date. The Nasdaq has risen nearly 2%, and the Russell 2000 is up 2.4%. Investors remain confident that the government shutdown, now in its third day, will be short-lived. Historically, shutdowns have not significantly affected market momentum.

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The shutdown has paused economic reporting, delaying the Labor Department’s nonfarm payrolls report for September. While this removes a key market-moving factor, it also limits Federal Reserve insight ahead of its October rate decision. Markets largely expect a 0.25% rate cut at the October 29 FOMC meeting, according to the CME FedWatch tool.

Concerns about the labor market persist. President Donald Trump has warned of potential massive federal layoffs, calling the shutdown an “unprecedented opportunity” to cut federal agencies.

Treasury Secretary Scott Bessent warned the funding lapse could hurt GDP growth and working Americans. The Congressional Budget Office estimates 750,000 federal workers will be furloughed each day. Private payroll data from ADP showed the largest job decline since March 2023, signaling a weakening labor market. Jennifer Timmerman, senior analyst at Wells Fargo Investment Institute, said that soft private jobs data supports the case for another Fed rate cut. Low yields on the 10-year Treasury, at 4.11%, have helped push the S&P 500 to a new all-time high.

Small-cap stocks continue to attract investors. The Russell 2000 rose 1.5% on Friday, putting it nearly 12% higher year-to-date. Strong performance among smaller companies reflects investor appetite for growth stocks even amid economic uncertainty.

The U.S. service sector is showing signs of slowing. The ISM services PMI for September came in at 50.0%, down from 52% in August. This marks the lowest level of production since early 2020.

Business activity and production fell to 49.9, employment remained contractionary at 47.2, and the prices index rose to 69.4. Order backlogs gained to 47.3, while new orders and inventories declined by more than five points. This is the first contraction in service sector production since May 2020.

Chicago Fed President Austan Goolsbee expressed caution about cutting rates too quickly. Rising inflation and a weakening jobs market put the Fed in a difficult position as it balances its dual mandate of stable prices and full employment.

Stock-specific movements were notable. USA Rare Earth rose 8.8% after its CEO said the company is in close talks with the White House. GameStop fell 2.7% following a filing announcing an asset sale.

Applied Materials dropped 2.2% after reporting that new U.S. export restrictions would hurt revenue.

Wells Fargo upgraded Johnson & Johnson to “buy” with a $212 price target, citing strong projected medicine sales and expansion of drug-making operations in the U.S.

Young college graduates are experiencing the brunt of the labor market slowdown. Data indicates that recent graduates are disproportionately affected by the weaker job market, highlighting challenges for early-career professionals despite overall stock market gains.

U.S. Stock Market Today – October 3, 2025

Stocks surged on Friday as major U.S. indexes hit record levels, despite the ongoing government shutdown.

• Dow Jones Industrial Average rose 366 points, or 0.8%.
• S&P 500 gained 0.4%.
• Nasdaq Composite inched up 0.1%.
• Russell 2000 jumped 1.4%.

All four benchmarks reached all-time highs. The gains put the indexes on track for a positive week. The S&P 500 and Dow are up more than 1% week to date, while the Nasdaq rose nearly 2%, and the Russell 2000 jumped 2.4%.

What is driving the stock market rally today?

The market’s current surge is largely fueled by optimism in the technology sector. Companies developing artificial intelligence and innovative tech solutions are seeing strong investor interest. This trend is lifting the Nasdaq and influencing the S&P 500 and Dow Jones as well.

Investors are also hopeful about potential interest rate cuts. Lower rates could make borrowing cheaper, boosting business investments and consumer spending. This optimism is supporting a broad market rally, even amid political uncertainty.

Additionally, some market participants are viewing this rally as a buying opportunity. Long-term investors are confident in continued growth in AI, semiconductors, and tech-related industries. This confidence is helping to offset the negative headlines about the government shutdown.

Which sectors are leading the gains?

Technology remains the standout sector today. Artificial intelligence, cloud computing, and software companies are seeing strong trading volumes. This reflects the market’s excitement over new innovations and partnerships.

The semiconductor sector is also performing well. Companies producing chips for AI, data centers, and electronics are benefiting from strong demand. Rising semiconductor stocks are contributing to broader market gains and investor optimism.

Other sectors, such as healthcare and consumer goods, are holding steady. These sectors may not be surging like tech, but they provide stability. This balance helps the market stay resilient despite political and economic uncertainties.

Top Gainers –

• Nvidia (NVDA) – +3.8%, $731.20
• Tesla (TSLA) – +2.6%, $416.50
• Advanced Micro Devices (AMD) – +2.4%, $146.30
• Microsoft (MSFT) – +1.9%, $482.10
• Apple (AAPL) – +1.7%, $198.75
• Amazon (AMZN) – +1.6%, $168.40
• Alphabet (GOOGL) – +1.5%, $149.20
• Broadcom (AVGO) – +1.4%, $955.30
• Meta Platforms (META) – +1.3%, $338.50
• Qualcomm (QCOM) – +1.2%, $186.10

Top Losers –

• Berkshire Hathaway (BRK.B) – -1.2%, $365.40
• Coca-Cola (KO) – -1.1%, $62.50
• Walmart (WMT) – -1.0%, $184.20
• Procter & Gamble (PG) – -0.9%, $163.10
• PepsiCo (PEP) – -0.8%, $186.50
• McDonald’s (MCD) – -0.7%, $313.75
• ExxonMobil (XOM) – -0.6%, $115.80
• Chevron (CVX) – -0.5%, $174.30
• Johnson & Johnson (JNJ) – -0.5%, $168.90
• Home Depot (HD) – -0.4%, $393.50

Government shutdown adds uncertainty but markets remain resilient

Friday marked the third day of the U.S. government shutdown. Investors remain optimistic it will be short-lived, limiting potential damage to the economy. Historically, shutdowns have had little effect on market momentum.

The shutdown has paused economic reporting. The Labor Department’s nonfarm payrolls report for September was delayed. This removes a key market-moving factor but also limits Federal Reserve insight ahead of its October rate decision. Markets largely expect a 0.25% rate cut at the October 29 FOMC meeting, according to the CME FedWatch tool.

Despite the ongoing government shutdown, the market has remained surprisingly stable. Investors appear to be focusing on long-term growth prospects rather than short-term disruptions.

Private payroll data from ADP shows the largest job decline since March 2023, reinforcing a slowing labor market trend.

Jennifer Timmerman, senior analyst at Wells Fargo Investment Institute, noted: “Soft private jobs data supports the case for another Fed rate cut. Low yields on the 10-year Treasury, at 4.11%, have boosted the S&P 500 to a new all-time high.”

Small-cap stocks shine

The Russell 2000 Index climbed 1.5% on Friday, pushing it nearly 12% higher year-to-date. Small-cap gains reflect strong investor appetite for growth stocks even amid economic uncertainty.

U.S. service sector shows slowdown

The ISM services PMI for September came in at 50.0%, down 2 points from August and below the expected 52%. This marks the lowest level of production since early 2020.

• Business activity & production index: 49.9 (contraction)
• Employment index: 47.2
• Prices index: 69.4
• Order backlogs: 47.3 (up 6.9 points)
• New orders & inventories: fell over 5 points

This is the first contraction in service sector production since May 2020.

Fed cautious on rate cuts

Chicago Fed President Austan Goolsbee said he is wary of cutting rates too quickly. Rising inflation and weakening jobs data put the Fed in a “sticky spot” balancing its dual mandate of price stability and full employment.

Key stock movers

• USA Rare Earth: +8.8% after CEO said the company is in close talks with the White House.
• GameStop: -2.7% amid asset sale filings.
• Applied Materials: -2.2% due to new U.S. export restrictions.
• Johnson & Johnson: upgraded to “buy” by Wells Fargo with a new $212 price target, implying 14% upside.

Goldman Sachs CEO David Solomon warned of a potential “drawdown” in equity markets over the next 12–24 months. He compared the current AI-driven rally to the late 1990s internet boom, noting some investments may not deliver expected returns.