U.S. stocks higher at close of trade; Dow Jones Industrial Average up 0.44%

MARKET WRAPS

STOCKS: Chip stocks and other big technology shares rallied, suggesting fears of an AI bubble are receding.

TREASURYS: Yields declined, with the curve flattening a bit, as futures-market bets move further in favor of a December rate cut by the Federal Reserve.

FOREX: The dollar strengthened slightly despite growing chances of a Fed rate cut inext month.

COMMODITIES: Oil futures settled higher, supported by a rally in equities, but reports of progress in renewed U.S. efforts toward a Russia-Ukraine peace deal kept the war-risk premium subdued.

HEADLINES

Fed's Daly Backs December Rate Cut, Citing Vulnerable Labor Market

San Francisco Fed President Mary Daly said she supports lowering interest rates at the central bank's meeting next month because she sees a sudden deterioration in the job market as both more likely and harder to manage than an inflation flare-up.

"On the labor market, I don't feel as confident we can get ahead of it," she said in an interview Monday. "It's vulnerable enough now that the risk is it'll have a nonlinear change." An inflation breakout, by contrast, is a lower risk given how tariff-driven cost increases have been more muted than anticipated earlier this year, she said.

Daly's views are notable because, while she doesn't have a vote on monetary policy this year, she has rarely taken a public position at odds with Fed Chair Jerome Powell. The chair is likely to play the key role resolving differences on a divided rate-setting committee about whether to cut rates or pause at its meeting Dec. 9-10.

Kohl's Names New CEO in Bid to Move Past Leadership Scandal

Kohl's new CEO has a message for customers: "We hear you."

After years of missteps that included scaling back petite-size and fine-jewelry departments as well as popular private brands, Kohl's has been trying to reverse course. That included naming its interim chief executive, Michael Bender, to the CEO role officially on Sunday.

"We are trying to restore some of those things that made Kohl's great, while evolving to become a more modern retail platform," said Bender, who had served as the retailer's interim CEO since May, after its then chief, Ashley Buchanan, was fired for violating the company's ethics code.

China's Xi Calls Trump in Unusual Move to Discuss Taiwan, Ukraine

In an unusual diplomatic move, China's leader Xi Jinping initiated a phone call with President Trump on Monday to discuss Taiwan, a flashpoint that has surged to the forefront in recent days as Japan takes a more assertive stance on the island's autonomy.

While Taiwan was Xi's focus, Trump steered the conversation to Ukraine, said people familiar with the matter, as Washington-Kyiv peace talks appear to make progress and Trump tries to decisively end Russia's war in Ukraine.

The two issues-Taiwan and Ukraine-are both sensitive for U.S.-China relations, but they are rarely linked in discussions between the two leaders. Xi made the outreach, people close to Beijing said, turning the high-level communication into a rare diplomatic overture from China.

Amazon to Invest $50 Billion Building Data Centers to Support U.S. Government

Amazon.com said it will invest $50 billion to expand artificial intelligence and high-performance computing capabilities for its cloud business' U.S. government customers.

The investment will add nearly 1.3 gigawatts of capacity through the build-out of data centers with advanced compute and networking technologies, enabling government agencies to accelerate discovery and decision-making, the company said Monday.

With the investment, government customers across Amazon Web Services will gain access to a broad set of AI tools, as well as hardware from AWS and Nvidia. The company said this access will help customers build their own AI systems, more easily handle large amounts of data and increase efficiencies.

U.S. to Skip Publication of Initial Third-Quarter GDP Estimate

The federal government will skip publication of its delayed initial estimate of third-quarter gross domestic product, instead aiming to get back on track with an update that remains to be rescheduled, the Bureau of Economic Analysis said Monday.

The initial GDP estimate for the July-to-September quarter had been due on Oct. 30, but was delayed because of the government shutdown.

A spokeswoman for the BEA, which is part of the Commerce Department, said she didn't "have any additional information to share" on when the agency would publish its first look at the third-quarter GDP.

Six Flags Names John Reilly President, CEO

Six Flags Entertainment has hired John Reilly as the amusement-park operator's new president and chief executive officer, effective Dec. 8.

Reilly's appointment is the latest twist in the roller-coaster ride Six Flags has been on since it closed a merger with rival Cedar Fair last summer. The company is looking to recover from a bruising summer during which new attractions broke down and attendance and season-pass sales dropped as a result of bad weather.

Shares in Six Flags rose more than 5% following the announcement. The stock has dropped nearly 70% over the past year.

Scripps Confirms Unsolicited Sinclair Bid

E.W. Scripps received an unsolicited acquisition bid from Sinclair and said it would carefully review and evaluate the proposal.

Last week, Sinclair disclosed that it had built a roughly 8% stake in Scripps and that the two companies held constructive talks about a potential deal.

After Sinclair's disclosure, Scripps said its board would "take all steps appropriate to protect the company and the company's shareholders from the opportunistic actions of Sinclair or anyone else."

Performance Food Group, US Foods Scrap Merger Talks

Performance Food Group and US Foods Holdings have called off talks to merge in a deal that would have created a food-distribution giant rivaling top player Sysco.

The companies on Monday said they mutually agreed to end an information-sharing process and will no longer pursue a potential combination.

Performance and US Foods said they each determined that the pursuit of their own standalone plans was in the best interest of their shareholders, and both companies reaffirmed their financial guidance.

TALKING POINT How the U.S. Economy Became Hooked on AI Spending

The turbulence that hit stocks tied to artificial intelligence last week highlights a broader risk to the economy. Growth has become so dependent on AI-related investment and wealth that if the boom turns to bust, it could take the broader economy with it.

Business investment in AI might have accounted for as much as half of the growth in gross domestic product, adjusted for inflation, in the first six months of the year. Rising AI stocks are also boosting household wealth, leading to more consumer spending, especially in recent months.

"It's certainly plausible that the economy would already be in a recession" without the AI boom, said Peter Berezin, chief global strategist at BCA Research.

Take away AI spending, and the economy looks in worse shape. Although job growth was higher than expected in September, job creation has nonetheless slowed this year and the unemployment rate is inching up. Private business investment excluding AI-related categories is mostly flat since 2019, according to Deutsche Bank. Outside of data centers, other commercial construction, such as shopping centers or office buildings, is down.

That makes the economy more dependent on AI. "It's the only source of investment right now," said Stephen Juneau, an economist at Bank of America.

Bank of America estimates that just four companies-Microsoft, Amazon.com, Alphabet and Meta Platforms-will make $344 billion in capital expenditures this year (equivalent to roughly 1.1% of GDP), up from $228 billion last year.

• Konrad Putzier, The Wall Street Journal

Expected Major Events for Tuesday

05:30/JPN: Oct Tokyo area department store sales

05:30/JPN: Oct Nationwide department store sales

07:00/GER: 3Q GDP - Detailed breakdown

07:45/FRA: Nov Consumer confidence survey

11:00/UK: Nov CBI Distributive Trades Survey

13:30/US: Sep PPI

13:30/US: Sep Advance Monthly Sales for Retail & Food Services

13:30/US: U.S. Weekly Export Sales

13:55/US: 11/22 Johnson Redbook Retail Sales Index

14:00/US: 3Q U.S. Quarterly House Price Index

14:00/US: Sep U.S. Monthly House Price Index

14:00/US: Sep S&P Cotality Case-Shiller Indices

15:00/US: Aug Manufacturing & Trade: Inventories & Sales

15:00/US: Nov Richmond Fed Business Activity Survey

15:00/US: Nov Consumer Confidence Index

15:00/US: Oct Pending Home Sales Index

17:59/UK: REC JobsOutlook survey

18:00/US: Oct Money Stock Measures

19:00/US: Oct Monthly Treasury Statement of Receipts and Outlays of the U.S. Government

21:30/US: API Weekly Statistical Bulletin

23:50/JPN: Oct Services Producer Price Index

All times in GMT. Powered by Onclusive and Dow Jones.

Expected Earnings for Tuesday

Abercrombie & Fitch Co - Class A (ANF) is expected to report $2.10 for 3Q.

Ambarella Inc (AMBA) is expected to report $-0.40 for 3Q.

Amentum Holdings Inc (AMTM) is expected to report for 4Q.

American Woodmark Corp (AMWD) is expected to report $1.21 for 2Q.

Analog Devices Inc (ADI) is expected to report $1.52 for 4Q.

Anavex Life Sciences Corp (AVXL) is expected to report $-0.15 for 4Q.

Arrowhead Pharmaceuticals Corp (ARWR) is expected to report $-0.24 for 4Q.

Autodesk Inc (ADSK) is expected to report $1.40 for 3Q.

Best Buy Co Inc (BBY) is expected to report $1.29 for 3Q.

Burlington Stores Inc (BURL) is expected to report $1.64 for 3Q.

CleanSpark Inc (CLSK) is expected to report $0.26 for 4Q.

Clearfield Inc (CLFD) is expected to report $0.08 for 4Q.