US equities opened higher on Wednesday, with the Nasdaq Composite leading gains as semiconductor shares rallied following robust earnings from South Korea's SK Hynix. Investors remained focused on the Federal Reserve's upcoming interest-rate decision and quarterly results from major technology companies due later in the day.
The S&P 500 advanced 0.24%, while the Nasdaq Composite climbed 0.33%. The Dow Jones Industrial Average added 46 points. The moves come as market participants weigh whether demand for artificial intelligence infrastructure can sustain the recent recovery in tech stocks, which had been pressured by concerns over rising borrowing costs and the returns on hefty AI investments.
Chip stocks surge after SK Hynix earnings
Semiconductor and data-storage names traded higher after SK Hynix reported a more than sevenfold increase in quarterly profit, beating analyst expectations. The South Korean company's US-listed shares jumped 10%. Micron Technology rose 5%, and SanDisk gained 5.3%. Seagate Technology fell 5.3% despite posting an earnings beat in its fiscal first quarter.
Other chipmakers also advanced. Nvidia added 0.4%, while Advanced Micro Devices and Marvell Technology rose 1.1% and 2%, respectively. Arm Holdings gained 0.8%, and Intel also traded higher. Alphabet shares climbed more than 1.22% following a media report that OpenAI plans to purchase Google's AI chips.
The Nasdaq Composite has gained roughly 2% this week, recovering after a difficult first half of October. The rebound has been supported by renewed interest in AI-related stocks following Anthropic's disclosure of its IPO filing. However, questions persist about the sustainability of tech companies' capital expenditure plans, particularly as higher borrowing costs raise concerns about debt-funded investments.
Microsoft and Alphabet results in focus
Investors will turn their attention to Microsoft and Alphabet after the market closes on Wednesday. Both companies are expected to report accelerating cloud revenue growth, making their results important indicators of demand for AI computing services. Markets will also scrutinize their capital expenditure forecasts to assess whether spending on data centers and related infrastructure is translating into stronger revenue.
Amazon and Intel are among other major tech firms scheduled to report later this week. Elsewhere, digital infrastructure provider Vertiv surged 12% after raising its full-year revenue and profit forecasts and delivering better-than-expected third-quarter results. Robinhood Markets fell 4.4% after missing Wall Street estimates for third-quarter profit, while Visa declined 0.56% following its latest quarterly results.
Fed decision and inflation data awaited
The Federal Reserve is scheduled to announce its interest-rate decision at 2 p.m. ET on Wednesday, concluding its two-day policy meeting. Markets widely expect policymakers to leave the federal funds target range unchanged at 3.75% to 4%, following September's quarter-point increase. According to CME's FedWatch tool, traders see approximately a 90% probability of rates remaining unchanged.
However, expectations for further tightening persist, with LSEG data indicating that markets are pricing in at least three additional quarter-point increases by late 2027. Investors will examine the Fed's statement and Chair Kevin Warsh's comments for indications of its future policy direction. The September Personal Consumption Expenditures inflation report, due Thursday, will provide another measure of price pressures. Third-quarter US gross domestic product data is also scheduled for release this week, with growth expected to reach 3.2%.
This article is for informational purposes only and does not constitute financial advice.
