Wall Street experienced churning as investors awaited major corporate earnings reports, particularly from the tech sector. The Nasdaq 100 saw its best day in three weeks, rallying $1.9%, driven by a rebound in chipmakers like Micron Technology Inc., which jumped $12%. This rebound in the semiconductor sector provided significant support for the main US stock indexes, with the Philadelphia SE Semiconductor Index finishing with a $5.2% rally, its second consecutive advance after dipping more than $20% below its late-June record high. The Dow Jones Industrial Average rose $385.38 points, or $0.74%, to $52,224.64, the S&P 500 gained $65.92 points, or $0.89%, to $7,509.20, and the Nasdaq Composite gained $329.13 points, or $1.29%, to $25,837.21.
Despite the semiconductor rally, skepticism is mounting regarding the hefty investments being poured into data-center development. The upcoming tech results will be highly scrutinized, with Tesla Inc. and Alphabet Inc. kicking off the megacap reporting season. Microsoft Corp., Meta Platforms Inc., Apple Inc., and Amazon.com Inc. are scheduled for the following week. GE Vernova Inc.'s higher revenue outlook failed to impress investors, indicating challenges for companies selling equipment to data centers to meet market expectations.
Analysts note that investors are buying back into semiconductor stocks ahead of earnings due to "fear of missing out" (FOMO) on potential outsized earnings beats and increased outlooks. However, Lindsey Bell, chief investment strategist at 248 Ventures, cautioned that when stocks rally sharply before earnings, it becomes more difficult for them to run in response to the actual results, as the numbers are expected to be good but the stocks are already "priced for perfection." Overall, the nascent earnings season has been solid, with over $90% of S&P 500 companies reporting results so far beating profit estimates.
