US equities opened higher on Tuesday, with the Nasdaq Composite leading gains as semiconductor stocks rallied and oil prices declined, providing some relief to investors ahead of the Federal Reserve's policy decision and a busy week of corporate earnings.
The S&P 500 advanced 0.28%, while the Dow Jones Industrial Average edged up by 3 points. The Nasdaq Composite climbed 0.54%, buoyed by renewed optimism in the artificial intelligence sector.
Chip stocks surge on AI optimism
Technology shares extended their gains from the previous session, as investors weighed the implications of Anthropic's initial public offering filing. Broadcom shares jumped more than 3% after a consortium of banks, including Bank of America, Citi, and Morgan Stanley, along with Blackstone, announced $63 billion in financing to support the purchase of Broadcom's technology for Anthropic.
Other semiconductor names also advanced. Micron Technology rose over 1%, Advanced Micro Devices gained 3%, and Nvidia added approximately 1%. The rally followed a strong Monday session, when AI-related stocks rebounded after Anthropic revealed its plans to list on the Nasdaq.
The filing has reignited investor interest in AI, though the company also reported substantial losses and highlighted risks tied to developing advanced AI models. Market participants are now looking to upcoming earnings from major tech firms for evidence that hefty AI investments are translating into revenue and profit growth.
Alphabet, Microsoft, and Amazon are scheduled to report results later this week. Jefferies analysts expect earnings growth among the Magnificent Seven to lag the rest of the S&P 500, forecasting 21% growth for the group versus 32% for the other constituents.
Oil prices ease as Fed meeting begins
Oil prices declined for a second straight session, supporting risk appetite as investors monitored the potential for de-escalation in the US-Iran conflict. West Texas Intermediate crude futures fell 0.58% to around $101 a barrel, while Brent crude futures slipped about 0.75% to $114.94 a barrel. Despite the pullback, Brent remained near its highest level since late April.
The Federal Reserve commenced its two-day policy meeting on Tuesday, with markets widely expecting the central bank to hold interest rates steady on Wednesday following last month's increase. Investors will scrutinize the Fed's policy statement and voting pattern for clues about the possibility of further rate hikes.
Market pricing indicates at least two additional rate increases by mid-2027, as inflation remains elevated amid geopolitical tensions. Traders are also monitoring durable goods orders, consumer confidence, and new home sales data for further signals on the health of the US economy.
Corporate earnings drive individual stock moves
Several companies reported quarterly results or updated their financial outlooks, contributing to notable moves. Coca-Cola shares edged down 0.49% despite raising its annual profit forecast. PayPal gained 1.13% after increasing its full-year adjusted profit outlook.
Royal Caribbean advanced 7% after lifting its full-year profit forecast, while UPS rose following better-than-expected third-quarter results. JetBlue jumped more than 12% despite reporting a larger-than-expected quarterly loss, as the airline anticipated further margin expansion in the fourth quarter. Whirlpool fell 2.8% after posting a surprise quarterly loss and missing revenue expectations.
Tesla shares rose more than 2%, extending gains from the previous session. Meta slipped 1% after increasing its planned equity fundraising to $97.5 billion to finance its AI expansion.
Investors are also looking ahead to the November 3 US midterm elections, which will determine control of Congress.
This article is for informational purposes only and does not constitute financial advice.
