AI trading drives US stocks to a second straight gain, Philadelphia Semiconductor Index up nearly 4%, Western Digital up 6.95%

An AI-driven rally in technology stocks lifted U.S. equities on Tuesday as the third-quarter earnings season reached its peak, while falling oil prices eased inflation worries and the market kept an eye on the Federal Reserve's second-to-last meeting of the year.

At the close, the Dow Jones Industrial Average rose 15.99 points, or 0.03%, to 52,377.57; the Nasdaq Composite gained 1.18% to 26,477.81; and the S&P 500 added 0.6% to 7,722.60.

[Hot Stock Performance]

Star technology stocks rose broadly, with Tesla up 4.04% to lead the way and Meta down more than 1.6%; to raise funds for artificial intelligence, Meta increased its largest-ever equity fundraising to $97.5 billion. Star technology stocks rose broadly, with Tesla up 4.04% to lead the way and Meta down more than 1.6%; to raise funds for artificial intelligence, Meta increased its largest-ever equity fundraising to $97.5 billion.

The Philadelphia Semiconductor Index jumped nearly 4%, and AMD rose more than 5% after Bank of America, Citigroup, Morgan Stanley and Blackstone Group announced $63 billion in financing to purchase Broadcom chips to provide computing power for AI upstart Anthropic. Shares of other chipmakers also rose in tandem.

Memory chip names strengthened, with Western Digital up 6.95% and SanDisk up 3.92%.

The optical communications sector performed well, with Coherent and Lumentum up more than 5%.

Boeing plunged 10.7% after its third-quarter loss exceeded expectations.

United Parcel Service (UPS) rose 5.8% after the company raised its full-year revenue and profit forecasts.

The Nasdaq Golden Dragon China Index fell 0.11%, with JD.com up 1.31%, Baidu up 0.54% and NetEase down 3.58%.

[Market Overview]

Buzz over details of Anthropic's imminent listing drove chip stocks to a third straight session of gains. It would be another major tech IPO following SpaceX's large listing in June.

As borrowing costs rise, concerns are growing about the sustainability of debt-financed spending, and the AI trade has come under pressure this month. "The market gets worried about AI spending from time to time, and then we come back and tech stocks lead us higher again," said Jed Ellerbroek, a portfolio manager at Argent Capital Management. "For the past two weeks, that switch seemed to be off, but it looks like in the first two days of this week, the switch was turned back on."

Despite those recent concerns, Ellerbroek still sees "strong confidence" among companies with data centers to keep growing. "The potential hidden risk remains that capital markets could be very volatile," he added.

Matthew Keator, managing partner at wealth management firm Keator Group, believes that IPOs by AI companies such as Anthropic have brought additional attention to the chip industry. "However, there are some signs that they may scale back some of their spending in this area in the future, so for me, that may mean this trade may have already run somewhat ahead of expectations."

Long-term U.S. Treasury yields moved higher, with the benchmark 10-year yield up 0.4 basis point to 4.992% and the 30-year yield up 0.4 basis point to 5.304%. The Fed is expected to announce its rate decision on Wednesday afternoon. While the market expects the central bank to keep rates unchanged, traders will look for clues on whether there will be another rate hike before year-end.

"Since Warsh took office, this feels like a rare Fed meeting where nothing much happens. That communication strategy may lead to fewer no-surprise meetings, but this time it looks like we'll have one, mainly because next week is the midterm elections, and I think the next meeting in December will be another high-risk event," Ellerbroek said.

On the Middle East situation, Xinhua reported that Iran's Supreme Leader Mojtaba Khamenei met on the 27th with Mohsen Rezaei, secretary of Iran's Supreme National Security Council, to discuss issues including safeguarding national and regional security by controlling the Strait of Hormuz. Mojtaba said that "driving the enemy to despair" is one of the direct achievements of Iran's resistance, and stressed that to end the fighting and the current "neither war nor peace" state and effectively safeguard the interests of Iran and the "Axis of Resistance," the conditions set by Iran should be implemented. Rezaei said that the secretariat of Iran's Supreme National Security Council is actively implementing the country's strategic guideline of "establishing an independent regional arrangement and order."

On the economic data front, U.S. sales of new single-family homes fell in September as higher mortgage rates caused by the Middle East conflict dampened demand. The Commerce Department's Census Bureau said Tuesday that new home sales fell 0.6% last month to a seasonally adjusted annual rate of 676,000. August data was also revised down to show sales of 680,000, rather than the previously reported 684,000.

The Conference Board's consumer confidence index rose to 91.7 in October from 84.2 in September, far better than the market expectation of 81.0. "The rebound was consistent with the decline in retail gasoline prices from September to October. Despite the October increase, consumer confidence remains in the long-term downward trend that has persisted over the past few years," said Fergus McCormick, senior economist for global indicators at the Conference Board.

New orders for U.S. durable goods rose 1.8% month-on-month in September, below the expected 1.9%. Excluding transportation orders, which rose 4.6%, new orders would have risen 0.5%; they rose 0.3% in August, versus expectations of 0.6%.

[Commodities Performance]

International oil prices fell, with the December light crude futures contract on the New York Mercantile Exchange down $1.86 to settle at $99.90 a barrel, a decline of 1.83%; the December London Brent crude futures contract fell $1.93 to settle at $113.88 a barrel, a decline of 1.67%.

Precious metals markets strengthened, with COMEX gold futures for October delivery on the New York Mercantile Exchange up 0.91% at $4,058.80 an ounce and COMEX silver futures up 0.34% at $54.293 an ounce.