U.S. equities closed higher on Tuesday, with the technology-heavy Nasdaq Composite leading gains as semiconductor stocks extended their rally and investors weighed a fresh batch of corporate earnings, a decline in oil prices, and the start of the Federal Reserve's two-day policy meeting.
The Nasdaq Composite advanced 1.14% to 26,467.06, while the S&P 500 rose 0.57% to 7,720.63. The Dow Jones Industrial Average edged up just 2.44 points to 52,364.02, leaving it essentially flat on the day.
Chip Stocks Rally on AI Optimism
Semiconductor shares climbed for a third consecutive session, buoyed by developments around Anthropic's planned initial public offering and sustained demand for AI infrastructure. Broadcom rose 4% 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. Micron Technology gained more than 3%, and Advanced Micro Devices advanced 5%.
The Philadelphia Semiconductor Index has surged 61.6% this year, far outpacing the S&P 500's 12.8% gain over the same period. However, the index remains more than 20% below its record closing high from June 22.
Meta Platforms' decision to increase its planned equity fundraising to $97.5 billion to fund its AI expansion also drew attention, though its shares slipped 1.2%. Despite the renewed rally, concerns persist about whether companies can sustain their AI spending amid rising borrowing costs and uncertainty over future investment plans. Economic data showing an increase in new orders for computers and peripheral equipment provided further evidence of demand for AI-related products.
Mixed Earnings Reactions
Third-quarter earnings continued to drive individual stock moves as the reporting season accelerated. Nearly half of S&P 500 companies have reported results, with 83% exceeding expectations, according to LSEG data.
JetBlue shares jumped 18% despite reporting a larger-than-expected third-quarter loss, as investors responded to its outlook for further margin expansion in the fourth quarter. United Parcel Service gained 5% after beating third-quarter expectations. Boeing fell 9.7% following a larger-than-expected quarterly loss. Water-management company Xylem dropped 12.4% after lowering its full-year forecasts, while Sherwin-Williams declined 2.3% after a quarterly profit miss. Royal Caribbean rose 6.5% after raising its full-year profit forecast.
Technology stocks led gains among the S&P 500's 11 major sectors, while energy shares recorded the steepest percentage decline as crude prices retreated.
Oil Falls as Fed Decision Looms
Oil prices declined as investors monitored diplomatic efforts to end the Middle East conflict. West Texas Intermediate crude settled 1.70% lower at $100.03 a barrel, while Brent crude fell 1.53% to $113.99. Iranian Supreme Leader Mojtaba Khamenei and senior national security official Mohsen Rezaei discussed conditions for ending the conflict, helping ease concerns about potential supply disruptions.
The Federal Reserve began its October policy meeting on Tuesday, with its decision due Wednesday afternoon. Markets broadly expect the central bank to keep its benchmark interest rate in the 3.75% to 4% range. Investors will focus on policymakers' guidance for the remainder of the year, particularly the possibility of another rate increase in December as the central bank continues to address inflation.
This article is for informational purposes only and does not constitute financial advice.
