The S&P 500 and the Nasdaq advanced on Monday, as artificial intelligence-related dealmaking boosted investor sentiment even as the US government shutdown extended through its sixth day.

The Nasdaq and the S&P 500 reached record closing highs, while the Dow Jones inched lower.

Chips took the lead after AMD said it would supply AI chips to OpenAI in a deal that could generate tens of billions of US dollars in yearly revenue and would allow the ChatGPT creator to buy a stake of up to 10 percent in the chipmaker.

AMD surged, pushing the broader Philadelphia Semiconductor Index higher.

The federal government remained shuttered for the sixth day as lawmakers idled in a partisan impasse. The shutdown has postponed the release of key economic indicators, forcing investors to rely on secondary, non-government data to gauge the timing and extent of Federal Reserve interest rate cuts.

Monetary policymakers have cautioned against rushing to lower the Federal Funds target rate as inflation remains high, while others believe signs of softness in the labour market merit rate cuts.

Financial markets have priced in an all-but-certain 94.6 percent chance of a 25 basis point interest rate reduction at the conclusion of the Fed's October meeting.

Without new US government data this week, market participants are monitoring reports on outstanding consumer credit, mortgage demand and the University of Michigan's preliminary take on October consumer sentiment.

The S&P 500 gained 0.36 percent to 6,740, while the Nasdaq rose 0.71 percent to 22,941. The Dow Jones fell 0.14 percent to 46,694.

Next week, third-quarter earnings will provide market catalysts as the reporting season gets underway with results from large US banks. (Reuters)