On Tuesday, trading capital flowed into chip stocks for a second straight session, driven by enthusiasm around semiconductor manufacturers. At the same time, the Federal Reserve began a two-day policy meeting, traders monitored falling oil prices, and investors pored over a heavy batch of corporate earnings.
The Dow Jones Industrial Average gained 0.09%, the S&P 500 rose 0.28%, and the Nasdaq climbed 0.40%.
Among the "Magnificent Seven": Tesla rose 1.09%, Nvidia gained 0.90%, Amazon added 0.46%, Google advanced 0.32%, Apple edged up 0.02%, Microsoft slipped 0.18%, and Meta Platforms dropped 0.67%.
Shares of Broadcom (AVGO) climbed more than 2%. A syndicate comprising Bank of America, Citigroup, Morgan Stanley, and Bowron Capital announced $63 billion in financing to support Anthropic's procurement of Broadcom technology. The news lifted other chip stocks in tandem.
Micron (MU) rose more than 2%, while AMD and Nvidia (NVDA) gained nearly 2% and about 1%, respectively. These names extended gains from the prior session. Earlier, Anthropic filed its IPO prospectus with Nasdaq, boosting AI-related sectors and lifting the major indexes. Following SpaceX's blockbuster listing in June, Anthropic is set to become another major tech IPO in 2026.
Falling oil prices on Tuesday also improved market risk sentiment, as investors continued to assess regional conflict developments. U.S. West Texas Intermediate crude futures fell nearly 1% to about $101 a barrel; international benchmark Brent crude dropped roughly 1% to $114 a barrel.
On the corporate front, delivery giant United Parcel Service (UPS) posted better-than-expected third-quarter results, sending its shares up more than 1%. JetBlue (JBLU) reported a wider-than-expected third-quarter loss, but said fourth-quarter margins could expand further, and the stock surged more than 11%. In contrast, Whirlpool (WHR) reported a surprise quarterly loss, and its shares fell 7%.
The Federal Reserve began a new monetary policy meeting on Tuesday. Markets widely expect the central bank to keep rates unchanged, but traders will look for clues on whether another hike could come before year-end. Thomas Block, Washington policy strategist at Fundstrat, wrote: "If rates are held steady as expected, the vote will still be worth watching after the split opinions at the previous two meetings. Although the Fed sees itself as above partisan politics, with only a week to go before the national election, it is unlikely to adjust rates."
On the economic data front, markets will watch durable goods orders, consumer confidence, and new home sales reports. In early Tuesday trading in Europe, the pan-European Stoxx 600 fell 0.35%; the UK's FTSE 100 led declines with a 0.99% drop; France's CAC 40 fell 0.27%; and Germany's DAX slipped 0.10%.
Asian markets closed higher: Japan's Nikkei 225 rose 1.73% and the Topix added 0.61%; South Korea's Kospi gained 3.09% and the small-cap Kosdaq climbed 2.29%; Australia's S&P 200 advanced 0.46%; mainland China's CSI 300 closed down 1.32%.
Don't Forget the Midterms
Andrea Gabellone, global head of equities at KBC Securities, said investors are also positioning ahead of next week's U.S. midterm elections. "Anthropic's IPO announcement is clearly a positive for the entire AI industry, but the ultimate impact will depend on how much investor demand it can attract, especially with the U.S. midterms approaching," Gabellone said. "Depending on the election outcome, market optimism around AI could take a hit, particularly if Democrats win across the board. Today's market action mainly reflects investors staying cautious before next week's vote."
Morgan Stanley Says U.S. Stock Correction Is Nearing Its End! Sticking to Year-End S&P Target of 8,000 and Highlighting Three Catalysts for a Rebound
Michael Wilson, chief U.S. equity strategist at Morgan Stanley, said in a new research note that the internal correction in U.S. stocks that began in June has entered its late tail phase, though the index could still see one final leg lower. Wilson said the digestion of three key uncertainties — AI-related capital issues, midterm election uncertainty, and changes in Fed liquidity — could help form a market bottom and lay a major foundation for the S&P 500 to rally to a record near 8,000 by year-end. Morgan Stanley's composite sentiment indicator is currently at neutral levels, and third-quarter earnings are expected to grow 27% year over year. On that basis, Wilson maintained his view that attractive buying opportunities should emerge as these key uncertainties clear up in the coming weeks.
Is the Window to Add to Stocks Finally Opening? Goldman Sachs Sticks With "Overweight" Equities
Goldman Sachs' latest GOAL Kickstart research report, which focuses on financial market risk appetite and stock-bond allocation stances, shows that the tech-led risk repricing has significantly reduced market crowding, though credit stress has not yet been resolved. Earnings support, lower valuations, and lighter positioning remain enough to support the Goldman Sachs financial market strategy team's "mildly pro-risk" asset allocation stance, which leans toward optimistic forecasts for equities and government bonds. The report places its proprietary risk appetite indicator, which has fallen to -0.5, falling credit excess returns, a rebound in major government bonds, pressure on European assets, and leadership in quality and defensive styles within a single cross-asset framework, cross-validated by valuation, earnings revisions, fund flows, volatility, liquidity, and recession models. As a result, Goldman Sachs maintained its "overweight" bullish rating on equities over both 3-month and 12-month horizons, which it had issued shortly before.
Citadel Warns: Tech Selloff Is Just the First Alarm, AI Trade Has "Almost No Margin for Error"
Nohshad Shah, head of EMEA fixed income sales at Citadel, said the selloff in tech stocks shows investors are increasingly demanding that massive AI spending eventually generate sufficient profits. "Given how much of the economy and stock market is now betting on the AI trade, there is almost no margin for error once other risks begin to emerge," Shah said. He noted that tariffs, fiscal stimulus, and elevated energy prices are making both the financing and operating costs of AI investment more expensive, while public opposition to data center construction could slow projects and drive up costs. He added that the U.S. has so far been able to absorb these pressures because earnings and confidence remain strong. But a sustained pullback in AI investment and financing could threaten the growth and household wealth that have helped cushion the economy against higher costs.
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