US stocks: Wall Street ends higher on revived AI momentum

The US stock market experienced a surge on Tuesday (Oct 27) as the tech sector, driven by artificial intelligence, continued its upward momentum. This rally marked the third consecutive day of gains for chip stocks, buoyed by the buzz surrounding Anthropic's upcoming initial public offering. The Philadelphia Semiconductor index, while down over 20% from its June 22 record high, outperformed the broader market this year, surging 62.1% compared to the S&P 500's 12.8% year-to-date increase.

Meta Platforms, in an effort to fund its AI expansion, raised the largest-ever equity fundraising of US$97.5 billion, causing its shares to drop 1.6%. Analysts attributed the AI stocks' bounce, particularly in semiconductor stocks, to the relief provided by Anthropic's news.

Rising new orders for computers and peripheral equipment indicated strong AI-related spending. Almost half of the S&P 500 companies had reported their third-quarter results, with 83% delivering better-than-expected outcomes. Boeing faced a significant decline of 10.7% following a larger-than-expected third-quarter loss, while Xylem fell 14.2% after reducing full-year forecasts. Conversely, United Parcel Service gained 5.8% after raising its annual revenue and profit projections.

Sherwin-Williams' quarterly profit miss resulted in a 2.7% stock decrease, negatively impacting the Dow. Royal Caribbean increased its full-year profit forecast, causing a 5.5% rise in its stock price.

The Federal Reserve convened for its penultimate meeting of the year, widely expected to maintain the fed funds target rate in the 3.75 to 4% range. The decision to avoid raising rates this meeting was seen as a relief, as it prevented the Fed from introducing a new hurdle for the market's rally. The Dow Jones Industrial Average ended the day at 52,377.57, the S&P 500 at 7,722.6, and the Nasdaq Composite at 26,477.81. Technology led the market gains, while energy shares suffered the most significant percentage decline.