Equities end higher as Anthropic’s IPO filing lifts AI stocks

US stocks experienced a rise on Monday, buoyed by the positive sentiment generated by Anthropic's IPO filing. The S&P 500 and Nasdaq both closed higher after two weeks of declines. Anthropic disclosed significant losses alongside robust revenue growth in its US initial public offering filing, highlighting its goal to develop AI systems that could transform the global economy, despite the high costs associated with the technology.

The AI-focused company proceeded with its listing plans despite recent market volatility causing some delays in IPO filings. The week ahead is filled with crucial economic indicators and corporate earnings reports, including the Federal Reserve's policy statement on Wednesday, economic growth and inflation data on Thursday, and earnings announcements from major tech companies like Alphabet, Microsoft, and Amazon.com.

Over a third of S&P 500 companies are set to report earnings this week, and investors will be closely scrutinizing these reports for signs of whether the massive AI investments translate into growth. JP Powers, chief investment officer at RWA Wealth Partners in Boston, expressed cautious optimism, stating that while today's release injected some positivity, the market's reaction to subsequent earnings reports remains uncertain.

The broader market also benefited from gains in semiconductor and chip-related companies, which are considered major beneficiaries of the AI boom. The Philadelphia chips index rose 2.8%, although it remains down 12.2% for the month. Meta's stock saw a decline of 1.9% following the social media giant's announcement of plans to raise up to $95 billion in equity to fuel AI-related infrastructure investments.

The AI sector has faced pressure this month due to concerns about the sustainability of debt-funded spending amid rising interest rates. However, Anthropic's filing helped lift sentiment, with other AI-linked companies like CoreWeave rebounding from earlier declines. Lumentum and Coherent, photonic product makers, were among the top-performing S&P 500 stocks, with gains of about 8% and 6%, respectively.

The technology sector led gains across the 11 major S&P 500 sectors, increasing 1.5%. Megacap and growth stocks were also mostly higher, with Tesla jumping 5.2% to reach its highest level in over three months following an upgrade from Barclays. Market participants are pricing in only a 12.7% chance of a rate hike from the Federal Reserve on Wednesday.

Despite this, concerns about persistent inflation pressures suggest that the central bank may not remain idle for long. Investors are also preparing for the Nov 3 midterm elections, which will determine control of the US Congress. Trading activity on US exchanges was robust, with advancing issues outnumbering decliners by a ratio of 1.36-to-1 on the New York Stock Exchange and 1.09-to-1 on the Nasdaq.

The S&P 500 closed with seven new 52-week highs and seven new lows, while the Nasdaq Composite recorded 82 new highs and 349 new lows. The average daily trading volume exceeded 17.2 million shares over the past 20 trading sessions.