Nasdaq Jumps 1.2% at Close as AI Stocks Lead Wall Street Gains

Key Facts

U.S. stocks closed higher Tuesday, October 27, with the Nasdaq Composite rising 1.2% to 26,477.81 points and the S&P 500 gaining 0.6% to 7,722.60 points. The Dow Jones added less than 0.1%, closing at 52,377.57 points. Gains were led by artificial intelligence and chip stocks, according to the Associated Press, even as most S&P 500 stocks declined. The divergence puts the indexes’ rise in the context of gains concentrated in a number of influential large companies. Markets are watching the Federal Reserve’s decision and results from major technology companies this week.

Chip stocks stood out in trading, with the Philadelphia Semiconductor Index rising 1.8% during the session, marking gains for a third consecutive day, according to a Reuters report published via Kitco. Reuters said details of Anthropic’s initial public offering supported the sector’s stocks. Broadcom shares also rose 4% after it announced a $63 billion financing agreement to help Anthropic access Broadcom’s XPU accelerators and networking solutions, according to the Associated Press. Investors are also watching upcoming results from Alphabet, Microsoft and Amazon this week. Reuters said attention is focused on whether companies’ huge investments in AI will translate into business growth.

The Fed decision was another focus, with markets widely expecting interest rates to remain unchanged on Wednesday, following an increase the previous month, according to Reuters. The Federal Open Market Committee meeting is scheduled for October 27 and 28, according to the central bank’s official calendar. The Fed chair is scheduled to hold a news conference on October 28 at 2:30 p.m., according to the official events calendar. In the bond market, the yield on the 10-year U.S. Treasury was relatively steady, slipping to 4.99% from 5.00% late Monday. These moves reflect investors’ focus on the monetary policy decision as markets also track demand and spending data.

Oil futures fell at settlement, with Brent crude down 1.67% to $113.88 a barrel and West Texas Intermediate down 1.83% to $99.90, according to Reuters. The agency linked the decline to peace talks in the Middle East and the easing of supply concerns they brought. Prices nonetheless remained near six-month highs amid shipping disruption in the region and continued failure to reach an agreement to end the U.S.-Israeli war with Iran. Analysts at Gelber & Associates said continued Houthi attacks and a growing military presence in the Gulf keep supply risks in place, even as diplomatic news encouraged a retreat in some of the risk premium. Brent prices had topped $117 a barrel the previous week, their highest since April, after Iranian attacks on tankers near the Strait of Hormuz.

On the economic front, new orders for manufactured durable goods rose $6.3 billion, or 1.8%, to $345.4 billion in September, following a 0.1% increase in August, according to the U.S. Census Bureau. Orders excluding transportation equipment rose 0.5%, while those excluding defense increased 2.2%. Transportation equipment led the increase, with orders up $5.2 billion, or 4.6%, to $119.8 billion. The bureau set November 3 as the release date for the full September report on shipments, inventories and orders. The upcoming report will provide further insight into industrial demand following the monthly increase in new orders.

In a separate survey, the U.S. Consumer Confidence Index rose 7.5 points to 91.7 in October, from 84.2 in September, according to the Conference Board. The Present Situation Index rose 8.6 points to 120.4, while the Expectations Index increased 6.9 points to 72.6. The board said improved household assessments of current and expected business conditions, along with lower gasoline prices between September and October, contributed to the index’s rise. But households planned to spend less on services and durable goods over the following six months amid concerns about higher prices, persistent inflation and eroding purchasing power. The preliminary survey covered October 1 to 21, and the index remained within a long-term downward trend despite its monthly increase.

Attention in the coming days will turn to the Fed meeting and then technology company results, with Microsoft announcing that its next earnings release is scheduled for October 28. Results from Alphabet, Microsoft and Amazon remain in focus for investors assessing whether heavy AI spending is translating into business growth, according to Reuters. The Census Bureau’s full report on September orders, shipments and inventories is due on November 3. Along with the Fed decision, these events give markets near-term points to watch after Tuesday’s session.