Makers of computer chips and other companies benefiting from the artificial intelligence (AI) boom drove Wall Street higher on Tuesday, rebounding after a decline the previous week. The S&P 500 climbed 0.9%, the Dow Jones Industrial Average added 0.7%, and the Nasdaq composite rose 1.3%. However, rising oil prices, with Brent crude briefly near $92 per barrel before settling at $91.01, reignited inflation fears. West Texas Intermediate futures also increased by 2.1% to $85 a barrel. This surge in oil prices, attributed to continued attacks between the United States and Iran, raises concerns that central banks might increase interest rates, potentially slowing economies and impacting stock valuations. The yield on the 10-year Treasury note also rose to 4.63% from 4.60%.
Several companies reported stronger-than-expected earnings, helping to bolster the market despite inflation concerns. 3M climbed 7.3% after surpassing profit and revenue expectations for the latest quarter and raising its full-year 2026 profit forecast. Hasbro rallied 8.8% as its Magic: The Gathering game achieved over $500 million in quarterly revenue for the first time, leading to an increased revenue forecast. General Motors saw a 4.9% increase after its profit and revenue beat analysts' expectations, with CEO Mary Barra noting strong North American demand. In contrast, Danaher slid 11% despite beating profit and revenue estimates, due to a weaker-than-expected forecast for underlying revenue growth for the summer.
AI-related stocks were a significant driver of market gains for the second consecutive day. Micron Technology jumped 12.2%, adding to its previous day's gains, and Nvidia increased by 2%, both being key contributors to the S&P 500's rise. Other semiconductor companies like Intel (up 5.9%) and SK hynix ADR (up 13.8%) also performed strongly. These gains helped offset a drop in some of the "Magnificent Seven" stocks, although Tesla bucked the trend, gaining 2.5%. Investors are closely watching upcoming earnings reports from major tech companies like Tesla and Alphabet, both scheduled for Wednesday, as well as Microsoft, Meta Platforms, Apple, and Amazon next week. These reports will set expectations for the tech sector, particularly regarding the profitability and productivity of significant AI investments.
Despite the overall market rebound, some companies faced headwinds. Homebuilder D.R. Horton slipped 0.9% despite exceeding expectations, as it continues to grapple with affordability concerns and cautious homebuyers. GE Vernova Inc.'s higher revenue outlook failed to impress investors, indicating market skepticism. The nascent earnings season has been largely positive, with over 90% of reporting S&P 500 companies beating profit estimates. However, there is an underlying sense that companies failing to meet Wall Street's high expectations are being penalized.
