The Dow Jones Industrial Average surged 546.61 points, or 1.05%, to close at 52,756.69 on Tuesday, as robust corporate earnings and a decline in oil prices helped counterbalance ongoing weakness in semiconductor stocks. The broader market showed mixed results, with the S&P 500 gaining 0.23% to 7,430.25, while the Nasdaq Composite slipped 0.24% to 24,873.20, pressured by a selloff in chipmakers.
Earnings Drive Dow Gains
Strong quarterly results from several blue-chip companies propelled the Dow's advance. Sherwin-Williams jumped 8% after reporting better-than-expected second-quarter earnings, while Coca-Cola climbed nearly 5% after beating earnings and revenue estimates and raising its full-year outlook. Boeing also contributed to the index's rise, posting positive free cash flow.
Investors continued to rotate out of technology stocks into sectors such as healthcare, consumer staples, and financials. The S&P 500 healthcare and consumer staples sectors both advanced, while financial stocks also posted gains, reflecting a broader market shift away from the tech-heavy leadership that has dominated much of the year.
Chip Stocks Remain Under Pressure
Semiconductor stocks extended their recent decline as concerns over artificial intelligence spending and rising competition weighed on the sector. The VanEck Semiconductor ETF (SMH) fell more than 3%, marking its fourth consecutive losing session. Micron Technology dropped about 10%, and AMD lost around 8%.
The weakness in chipmakers reflects investor anxiety that major technology companies may be overspending on AI infrastructure, particularly data centers. Market participants are now awaiting quarterly earnings from Microsoft, Amazon, Apple, and Meta Platforms, which are expected to provide clarity on AI investment trends and demand for semiconductor products. Microsoft's upcoming earnings report is seen as a key test for the sector.
Despite the broader tech weakness, software stocks recovered from earlier losses. Microsoft gained ahead of its earnings release, while Apple advanced, briefly becoming the second company to reach a $5 trillion market capitalization. Corning declined after issuing third-quarter sales guidance below analyst expectations, while IQVIA Holdings jumped 12% after raising its annual profit forecast.
Oil Prices Fall, Fed Decision Looms
Falling oil prices provided additional support for equities, as easing geopolitical tensions in the Middle East and Ukraine reduced risk premiums. West Texas Intermediate crude fell about 5% to just above $78 per barrel, while Brent crude settled down 4.8% at $84.09 per barrel. Lower energy prices helped bolster investor appetite for sectors outside technology, reinforcing the rotation that has developed in recent weeks.
Attention now turns to the Federal Reserve's monetary policy announcement on Wednesday. According to the CME FedWatch Tool, traders see a 71% probability that the central bank will leave interest rates unchanged, while assigning a 29% chance of a 25-basis-point rate hike. Investors will closely monitor the Fed's policy statement and outlook for clues on future rate moves, particularly as higher borrowing costs could weigh on companies making significant investments in AI infrastructure.
This article is for informational purposes only and does not constitute financial advice.
