Wall Street rises on revived AI momentum as earnings season picks up
(Updates to mid-afternoon trading)
* Indexes: Dow about flat, S&P up 0.57%, Nasdaq gains 1.14%
* Boeing drops following quarterly loss
* Data shows AI capex continues apace
By Stephen Culp and Shashwat Chauhan
NEW YORK, Oct 27 (Reuters) - An AI-fueled tech rally sent US stocks higher on Tuesday as third-quarter reporting season gained steam, while easing oil prices soothed inflation jitters and the Federal Reserve convened for its penultimate meeting of the year.
The tech-laden Nasdaq led gains, while the blue-chip Dow was essentially unchanged.
The buzz surrounding details of Anthropic's impending initial public offering helped boost chip stocks for the third consecutive session.
Growing concerns over the viability of debt-funded spending amid rising borrowing costs have weighed on the AI trade this month. The Philadelphia SE Semiconductor index, while off more than 20% from its June 22 record closing high, has outperformed the broader market this year, gaining 61.6% compared with the S&P 500's 12.8% year-to-date advance.
To fund its AI expansion, Meta increased its largest-ever equity fundraising to $97.5 billion, sending the Facebook parent's shares down 1.2%.
IPOs for AI companies such as Anthropic are generating additional buzz for the chip sector, said Matthew Keator, managing partner in the Keator Group, a wealth management firm in Lenox, Massachusetts.
"However, there's been some signs that they may be pulling back a little bit on some of their future spending in the space," Keator added. "So to me, that says that the trade could be a bit over its skis."
Economic data showed rising new orders for computers and peripheral equipment, supporting the notion of strong AI-related spending.
Nearly half of S&P 500 companies have reported third-quarter results. Of those, 83% have delivered better-than-expected results, according to the most recent available LSEG data.
Boeing tumbled 9.7% following its bigger-than-expected third-quarter loss, while water-management company Xylem dropped 12.4% after trimming full-year forecasts.
Sherwin-Williams' quarterly profit miss sent the stock down 2.3% and weighed on the Dow.
Royal Caribbean rose 6.5% after the cruise operator lifted its full-year profit forecast.
The Fed convened on Tuesday for its October monetary policy meeting, which is widely expected to culminate in a decision to keep the fed funds target rate on hold in the 3.75% to 4% range, saving its second rate hike of the year for its final meeting in December, according to CME's FedWatch tool.
"We're going to see another rate hike, whether it's this week or at the next meeting," Keator said. "I expect to see a continued commitment on the chairman's and the committee's part, showing they mean business with respect to inflation."
The Dow Jones Industrial Average rose 2.44 points, or 0.00%, to 52,364.02, the S&P 500 gained 43.86 points, or 0.57%, to 7,720.63 and the Nasdaq Composite gained 297.68 points, or 1.14%, to 26,467.06.
Of the 11 major sectors in the S&P 500, technology shares led gainers, while energy shares suffered the steepest percentage decline, hit by easing crude prices as attention turned to Middle East peace negotiations.
Advancing issues outnumbered decliners by a 1.59-to-1 ratio on the NYSE. There were 60 new highs and 121 new lows on the NYSE.
On the Nasdaq, 2,984 stocks rose and 1,691 fell as advancing issues outnumbered decliners by a 1.76-to-1 ratio.
The S&P 500 posted nine new 52-week highs and five new lows, while the Nasdaq Composite recorded 48 new highs and 202 new lows.
(Reporting by Stephen Culp; Additional reporting by Shashwat Chauhan and Utkarsh Hathi in Bengaluru; Editing by Rod Nickel)
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