Major U.S. stock indexes closed higher on Tuesday, with the Nasdaq leading gains, driven by a powerful rebound in semiconductor shares. The Nasdaq Composite advanced 1.29% to 25,837.21, the S&P 500 rose 0.89% to 7,509.20, and the Dow Jones Industrial Average climbed 0.74% to 52,224.64. This rally in chip stocks helped to divert attention from recent Middle East hostilities and tariff disputes, as investors now look ahead to key technology earnings.
Semiconductor stocks, which had previously dipped due to concerns over high valuations and significant AI investments, saw a strong recovery. The Philadelphia SE Semiconductor Index surged 5.2%, marking its second consecutive advance after falling more than 20% from its late-June record high. Notable gainers included SanDisk, up 14.3%, Western Digital, which rose 12.5%, and Micron Technology, with a 12.2% advance. The iShares Semiconductor ETF (SOXX) added 5.5%, while individual chipmakers like Advanced Micro Devices, Intel, and Marvell Technology saw advances between 6% and 9%. Intel shares specifically benefited from news that the firm would manufacture Fortinet's next-generation cybersecurity chips.
The information technology sector led the market's 11 major industry sectors, rallying 2.35%. In individual stock performance, 3M shares surged 7.3% after the industrial giant increased its full-year profit forecast, and Hasbro jumped 8.8% on raised annual revenue and profit forecasts, fueled by demand for digital gaming. Conversely, Danaher shares were the biggest loser in the S&P 500, sinking 11% after trimming its core revenue growth outlook. MSCI tumbled 10% after raising its full-year operating expense forecast despite positive quarterly revenue, and Genuine Parts dropped 2.7% after lowering its full-year profit outlook.
Market focus this week will be on upcoming quarterly results from tech giants including Alphabet, Intel, and Texas Instruments. Analysts anticipate strong performances, particularly from Alphabet, with revenue projected to increase about 20%, driven by a 65% rise in cloud revenue. However, some analysts caution that strong rallies ahead of earnings reports can make it more challenging for stocks to continue their ascent in response to the actual results. Oil prices also saw an increase, with West Texas Intermediate futures up 2.1% to $85 a barrel, reaching their highest level since June 12, following U.S. forces' strikes on Iranian infrastructure.
