U.S. stocks ended higher on Tuesday, with all three major indexes posting fresh record closing highs as investors explored artificial intelligence (AI) and remained upbeat about corporate earnings, a day before the Federal Reserve makes a decision on interest rate cuts.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) rose 0.3% or 161.78 points, to end at 47,706.37 points, hitting a fresh all-time closing high.
The S&P 500 gained 0.2%, or 15.73 points, to close at 6,890.89 points, recording a new all-time high. Tech stocks were the biggest gainers.
The Technology Select Sector SPDR (XLK) rose 1%. However, the Utilities Select Sector SPDR (XLU) lost 1.7%, while the Real Estate Select Sector SPDR (XLRE) declined 2.2%. Eight of the 11 sectors of the benchmark index ended in negative territory.
The tech-heavy Nasdaq jumped 0.8%, or 190.94 points, to finish at 23,827.49.
The fear gauge, CBOE Volatility Index (VIX), climbed 3.99% to 16.42. Decliners outnumbered advancers on the NYSE by a 1.35-to-1 ratio. On the Nasdaq, a 1.53-to-1 ratio favored declining issues. A total of 20.5 billion shares were traded on Tuesday, lower than the last 20-session average of 20.96 billion.
On the Nasdaq, there were 1,868 new highs and 2,862 new lows. On the NYSE, there were 613 new highs and 102 new lows.
AI Stocks Rally Ahead of Big Tech Earnings
Tech stocks gained on Tuesday, led by an AI rally. NVIDIA Corporation (NVDA) was the biggest gainer, with the company’s shares jumping 5% after the semiconductor giant said that it will manufacture artificial intelligence supercomputers for the U.S. energy sector.
NVIDIA made several notable announcements on Tuesday at its GTC conference. The chipmaker said that it will take a $1 billion stake in Finnish firm Nokia, which the telecom giant said will use part of that funding to support its AI initiatives.
NVIDIA’s stock added $230 billion in market value following the announcements, putting the AI chip darling on track to become the first company to be worth $5 trillion. NVIDIA carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Shares of Microsoft Corporation (MSFT) also gained 2% ahead of its earnings results on Wednesday after the bell. A number of the “Magnificent Seven” names, such as Apple, Inc. (AAPL), Amazon.com, Inc. (AMZN), Alphabet, Inc. (GOOGL) and Meta Platforms (META), are scheduled to report their quarterly results this week.
The earnings season, which is gathering steam, has so far been impressive, with nearly one-third of the S&P 500 companies having reported already. Of these, almost 83% have surpassed earnings expectations, according to FactSet data.
Fed to Decide on Interest Rates
Investors are also looking forward to the Federal Reserve’s decision on interest rates at the end of its two-day policy meeting on Wednesday. The central bank is expected to cut interest rates by 25 basis points for the second time this year.
Traders are also eagerly awaiting comments from Fed Chairman Jerome Powell post meeting, as they expect him to signal a third rate cut in the final month of the year.
Investors also closely monitored trade developments. The Wall Street Journal reported on Tuesday that President Donald Trump and China’s Xi Jinping could reach a trade deal that would lower U.S. tariffs on Chinese products in return for China agreeing to limit the export of chemicals used to make fentanyl.
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Amazon.com, Inc. (AMZN): Free Stock Analysis Report Apple Inc. (AAPL): Free Stock Analysis Report Microsoft Corporation (MSFT): Free Stock Analysis Report NVIDIA Corporation (NVDA): Free Stock Analysis Report Alphabet Inc. (GOOGL): Free Stock Analysis Report Meta Platforms, Inc. (META): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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