Nasdaq 100 Posts Best Day in Three Weeks as Chip Stocks Rebound

Major US stock indices closed higher on Tuesday, with the Nasdaq 100 notching its strongest performance in three weeks. A rebound in chip stocks, central to the artificial intelligence trade, helped offset concerns over renewed tensions between the US and Iran.

As investors geared up for a fresh wave of corporate earnings, the Nasdaq 100 climbed 1.9%, marking its largest single-day gain since June 29th.

The index was buoyed by robust export data from South Korea, which lifted shares of Samsung Electronics Co Ltd and Taiwan Semiconductor Manufacturing Company Ltd (TSMC). Another major beneficiary of AI infrastructure build-out, Micron Technology Inc, saw its stock surge 12%.

The S&P 500 closed nearly 1% higher, with nine of its eleven sectors finishing in positive territory. The technology sector led the gains, while the consumer staples sector lagged.

The Philadelphia Semiconductor Index jumped 5.2%. The rally followed a Nikkei report indicating that TSMC is planning price increases of up to 10% next year.

The NYSE FANG+ Index, a gauge of major tech giants, edged up 0.1%. Shares of Advanced Micro Devices Inc (AMD) and Intel Corp both gained more than 8%, reversing a recent period of pressure on AI-related stocks.

Storage device maker SanDisk was the best performer in the S&P 500 on Tuesday, soaring 14% for its biggest one-day gain in nearly a month.

"After a significant run-up, investors are becoming more selective with their AI-related picks," said Rob Haworth, Senior Investment Strategy Director at US Bank Asset Management. "Earnings growth remains the core factor supporting the market's long-term outlook."

Market attention now turns to earnings reports from Alphabet Inc and Tesla Inc due on Wednesday, followed by results from Intel on Thursday.

The Federal Reserve has entered its quiet period ahead of the July 29th interest rate decision, and no major economic data is scheduled for release this week.

At the closing bell, the S&P 500 was up 0.9% at 7,509.2 points.

The Dow Jones Industrial Average advanced 0.7% to 52,224.64 points.

The Nasdaq Composite Index rose 1.3% to 25,837.21 points.

The Nasdaq 100 Index gained 1.9% to 29,155.18 points.

The Russell 2000 Index increased 1.5% to 2,987.395 points.