By Sabrina Escobar

Gold Rush. Stocks played second-fiddle to gold on Tuesday, as the precious metal charged to new highs.

Gold futures topped $4,000 an ounce for the first time ever, extending the metal's best run since 1979. Bullion is up over 50% in 2025.

Political upheaval in three major economies pushed gold prices higher, writes my colleague, George Glover -- the continuing U.S. government shutdown ( crawling into its eighth day with little signs of a resolution), France's governmental collapse, and the election of Sanae Takaichi as Japan's new prime minister. There's reason to believe the rally can keep going, George adds:

Federal Reserve interest-rate cuts could give the precious metal a further boost. When borrowing costs are lower, that makes bullion more appealing relative to other safe-haven assets that have yields, such as bonds and savings accounts.

While gold prices rose, stocks had a rough day.

The tech-heavy Nasdaq Composite closed 0.7% lower. The S&P 500 shed 0.4%, breaking a seven-day winning streak, and the Dow Jones Industrial Average was down 0.2%.

Worries about the return on all that AI spending dragged on the indexes, spurred on by a new report from The Information. Internal documents from Oracle suggested that profitably monetizing the AI buildout is still in its early stages. The outlet noted that Oracle lost $100 million in the three months ended in August from rentals of Nvidia Blackwell chips.

Oracle stock was off 2.4% on Tuesday, rebounding slightly from earlier losses after Fox Business anchor Liz Claman reported, citing sources familiar to the situation, that the story on Oracle "does not reflect the actual financials of that business."

To echo my colleague Connor Smith, "in a market where a daily AI headline can send a stock up more than 20%, investors will also need to be ready for moves the other way."

The Hot Stock: AppLovin +7.6% The Biggest Loser: Seagate Technology -7.3%

Best Sector: Consumer Staples +0.9% Worst Sector: Consumer Discretionary -1.7%

Tesla's Surprise

Tesla announced Tuesday that it was launching a pair of new cars priced below $40,000 in the U.S. in a bid to tap into a larger share of the auto market.

The announcement ended two days of speculation brought on after Tesla posted a series of cryptic teaser trailers on X Sunday morning. Markets were hoping Tesla would unveil its much-awaited lower-priced vehicle, which investors think can boost the company's quarterly deliveries and overall demand.

They got what they wanted -- sort of.

Both of the sub-$40,000 models are pared down versions of existing cars: a new standard Model Y starting at $39,900, and a Model 3 that starts at $36,900.

The problem, writes Barron's' Tesla expert Al Root, is that these aren't altogether new models.

"The risk is that buyers interested in a Tesla will opt for the cheaper version of these Models since there are no new versions to draw in a bevy of buyers," Al notes.

And because they're slightly cheaper, they could mess with Tesla's profit margins.

Wedbush analyst Dan Ives, a vocal bull, writes that while this is a "step in the right direction" to getting deliveries back on track, he was "relatively disappointed" at the fact that the current models' price points are only about $5,000 lower than prior Model 3s and Ys.

Tesla stock closed 4.5% lower on Tuesday.

The Calendar

The Federal Open Market Committee releases the minutes from its mid-September monetary-policy meeting tomorrow. The FOMC cut the federal-funds rate by a quarter of a percentage point to 4%-4.25% at that confab, with newly appointed Fed governor Stephen Miran dissenting in favor of a half a point rate cut. Traders are fully expecting another quarter-point rate cut at the FOMC's late October meeting.

What We're Reading Today

   -- Why Verizon's Surprise CEO Change Rattled the Wireless Industry 
 
   -- IBM Stock Hits Record High on Anthropic Deal. It's Not OpenAI, but It 
      Will Do. 
 
   -- Home Builders' Stocks Are Falling. Why Wall Street's Most Bullish Analyst 
      Just Backed Off. 
 
   -- Consumers Are More Worried About the Labor Market and Inflation, NY Fed 
      Report Says 
 
   -- Wells Fargo Faces Activist Call for Independent Board Chair 

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October 07, 2025 18:21 ET (22:21 GMT)

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