US stock indexes showed mixed performance, with the S&P 500 rising by 0.2% to 7,428.78 and the Dow Jones Industrial Average climbing 1.2% to 52,747.32. This occurred as investors processed the latest corporate earnings and a notable sell-off in semiconductor and other AI-linked stocks. The technology-heavy Nasdaq Composite, however, slipped 0.2% to 24,876.91, largely due to ongoing declines in chip stocks.
Despite the specific struggles in the AI sector, broader market resilience was evident. The S&P 500's equal-weighted version reached record highs, and the Dow's gains outweighed the rout in semiconductor giants, which had pushed the Nasdaq 100 near a technical correction. Analysts, such as those at HSBC Holdings Plc, cited strong profit growth, undemanding valuations, and a solid start to second-quarter earnings as reasons for the strength in riskier assets.
Oil prices eased, with Brent crude falling below $85 a barrel and hitting $84.09, which helped to reduce inflation worries and drive bond yields lower. This decline in oil prices also supported the view that the consumer price index may have peaked in May. Investor focus remains on the Federal Reserve's two-day policy meeting, which began Tuesday, with traders largely expecting rates to be held steady, though a rate hike remains a possibility. US consumer confidence also ticked lower in July to 90.8, reflecting softened perceptions of the labor market.
Earnings season is in full swing, with S&P 500 companies expected to see a 39% jump in aggregate second-quarter earnings, largely driven by AI-related firms. While some AI-linked stocks faced pressure, strong earnings from other sectors contributed to market gains. For instance, Coca-Cola rallied 5% after raising its annual forecasts, and Boeing jumped 4.8% after reporting positive free cash flow. Microsoft Corp. and Meta Platforms Inc. are scheduled to report results Wednesday, followed by Apple Inc. and Amazon.com Inc. on Thursday.
While the AI sell-off has been significant for chipmakers, who are heading towards their worst month since 2008, analysts like Ulrike Hoffmann-Burchardi of UBS Chief Investment Office maintain a constructive outlook on semiconductors due to robust AI demand, suggesting that opportunities for market gains extend beyond a narrow set of AI-linked stocks. Corning, however, tumbled 12% after its third-quarter sales forecasts missed estimates.
