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NEW YORK — The momentum continues as manufacturers of semiconductors and other beneficiaries of the artificial intelligence (AI) surge propel Wall Street upward on this Tuesday.
The S&P 500 experienced a 0.5 percent increase, while the Dow Jones Industrial Average ascended by 327 points, or 0.6 percent, around 10:15 a.m. Eastern time, and the Nasdaq composite surged by 0.8 percent.
AI stocks took center stage once again, rising for a second consecutive day following a precipitous decline the week prior.
After experiencing a meteoric rise due to escalating investments in AI chips and data centers, these stocks have faced challenges recently, ignited by concerns that their valuations may have soared too high.
Market participants are also anxious that AI expenditures might diminish if profits and productivity fail to materialize as anticipated.
Micron Technology surged 6 percent, building upon its prior 1.9 percent gain, recovering from a significant 13.3 percent drop seen last week.
Advanced Micro Devices also saw a robust increase of 4.3 percent, marking it as a pivotal contributor to the uplift of the S&P 500.
These advancements occurred in spite of escalating oil prices, with Brent crude surpassing US$90 per barrel due to ongoing hostilities between the United States and Iran.
The price climbed 2.2 percent to reach US$91.17, a stark contrast to under US$72 earlier this month, which closely mirrored pre-war figures.
Rising oil prices pose a potential threat to the recent easing of inflationary pressures, which had been slower than economists’ predictions.
This development could compel the Federal Reserve and other central banks to consider increasing interest rates, potentially stifling economic growth and adversely affecting equity valuations.
The yield on the 10-year Treasury note rose to 4.62 percent, up from 4.60 percent late on Monday and significantly higher than the 3.97 percent recorded prior to the onset of the conflict with Iran.
On Wall Street, a slew of unexpectedly robust earnings reports from major U.S. corporations buoyed stock performance, even amidst rising pressures.
3M shares surged 9.9 percent after it surpassed analysts’ profit and revenue forecasts for the most recent quarter, while also raising its profit outlook for the fiscal year 2026.
Hasbro saw a remarkable increase of 10.6 percent, buoyed by the announcement that its Magic: The Gathering game exceeded US$500 million in quarterly revenue for the first time. The company, too, adjusted its revenue expectations upward for the year.
General Motors gained 3.8 percent after announcing that its latest quarterly profit and revenue eclipsed analyst projections, with CEO Mary Barra noting sustained strong demand in North America.
These advancements mitigated a decline in Danaher, which dropped 12.2 percent despite exceeding analysts’ profit and revenue estimates.
Analysts highlighted the firm’s forecast for an underlying metric of revenue growth for the upcoming summer as falling short of Wall Street’s expectations.
Homebuilder D.R. Horton edged down 0.2 percent, despite also outperforming profit and revenue projections for the latest quarter.
Executive Chairman David Auld indicated ongoing concerns regarding housing affordability, alongside hesitance observed among prospective homebuyers.
Mortgage rates have surged to their highest levels in nearly a year, spurred by increasing Treasury yields in the bond market.
This could necessitate D.R. Horton providing additional incentives to attract buyers, potentially squeezing its profit margins.
Companies are under significant pressure to demonstrate robust growth in profit and revenue due to the lofty valuations of their stock prices. Market indexes remain near record highs, notwithstanding the recent volatility in AI stocks.
Internationally, stock indexes exhibited a mixed performance in Europe, characterized by relatively modest fluctuations.
The United Kingdom’s FTSE 100 recorded a slight uptick of 0.1 percent as new Prime Minister Andy Burnham convened his inaugural Cabinet meeting.
In Asia, stocks displayed greater volatility. South Korea’s Kospi surged 3.6 percent, buoyed by impressive gains from its two leading firms, Samsung Electronics and SK Hynix, which have reaped substantial benefits from the AI explosion.
Notably, the Kospi has ascended by 60 percent year-to-date, even with a 20 percent decline in July thus far.
Tokyo’s Nikkei 225 advanced by 3.3 percent upon returning from a holiday on Monday, while indexes rose 1.8 percent in Shanghai and experienced a slight dip of less than 0.1 percent in Hong Kong.
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