Wall Street rises on revived AI momentum as earnings season picks up

US stocks surged on Wednesday as a tech-driven rally gathered pace, with the third-quarter earnings season in full swing. The tech-focused Nasdaq index led the advance, while the Dow industrials remained flat. Anthropic's forthcoming initial public offering (IPO) sparked excitement, bolstering chip stocks for the third consecutive day. However, concerns about debt-fueled spending due to rising borrowing costs have dampened sentiment among AI-related investments.

Meta's largest equity fundraising to date, amounting to $97.5 billion, led to a 1.2% decline in the social media giant's shares. Some companies, including Anthropic, may be scaling back their future spending in the sector, according to Matthew Keator, a managing partner at Keator Group, a wealth management firm in Massachusetts.

Economic indicators revealed an uptick in computer and peripheral equipment orders, suggesting robust AI-related spending. Eighty-three percent of S&P 500 companies reported stronger-than-anticipated third-quarter results, according to the latest LSEG data. Boeing plummeted 9.7% after reporting a larger-than-expected loss in the same period, while Xylem fell 12.4% following a revision to its full-year outlook. Sherwin-Williams' profit disappointment led to a 2.3% stock decline, negatively impacting the Dow.

Royal Caribbean lifted its full-year profit forecast, resulting in a 6.5% stock increase for the cruise operator. The Federal Reserve convened for its penultimate meeting of the year, with expectations that the central bank would maintain the federal funds target rate between 3.75% and 4.0%. This decision would likely be followed by another rate hike at the committee's final meeting in December, according to Keator.

The Dow Jones Industrial Average closed at 52,364.02, the S&P 500 at 7,720.63, and the Nasdaq Composite at 26,467.06. Within the S&P 500, technology shares led the gainers, while energy shares suffered the most significant percentage decline due to easing crude prices and focus on Middle East peace negotiations. Advancing issues outnumbered decliners on the NYSE by a ratio of 1.59-to-1, with 60 new highs and 121 new lows.

On the Nasdaq, 2,984 stocks rose and 1,691 fell, with a 1.76-to-1 ratio of advancing issues over decliners.