Wall Street closed higher on Tuesday, led by a sharp rebound in semiconductor stocks as investors positioned themselves ahead of earnings from major technology companies, brushing aside fresh geopolitical tensions in the Middle East and the latest US tariff measures.
The Nasdaq Composite rose 329.13 points, or 1.29%, to finish at 25,837.21, while the S&P 500 gained 65.92 points, or 0.89%, to 7,509.20. The Dow Jones Industrial Average added 385.38 points, or 0.74%, to close at 52,224.64.
Technology shares were the biggest drivers of the rally, with the information technology sector climbing 2.35%. The Philadelphia Semiconductor Index jumped 5.2%, extending gains for a second straight session after last week’s sell-off that left the index more than 20% below its late-June record high.
The recovery came as investors returned to chip stocks before quarterly earnings from technology heavyweights including Alphabet, Intel and Texas Instruments later this week.
“Investors are really buying back in to the semis ahead of earnings because they have fear of missing out (FOMO), that these companies could report outsized earnings beats and increase their outlooks and they don’t own as much as they did before the most recent pullback,” said Lindsey Bell, chief investment strategist at 248 Ventures.
Bell cautioned that the recent rally may also raise expectations.
“The numbers are going to be really good, but the stocks are also priced for perfection,” she said.
Among the strongest performers on the S&P 500 were Sandisk, which surged 14.3%, Western Digital, up 12.5%, and Micron Technology, which climbed 12.2%.
Investors largely ignored President Donald Trump’s announcement of new 50% tariffs on a broad range of Canadian imports, as well as renewed concerns over the Middle East after oil prices settled 2% higher following threats by Yemen’s Iran-aligned Houthis to impose a blockade on commercial shipping in the Red Sea.
“Investors see (the war) as transitory because we know two things — that $100 oil is a pressure point for Trump, and we also know that midterm elections are coming up,” Bell said.
Corporate earnings also remained in focus.
Industrial conglomerate 3M jumped 7.3% after raising its full-year profit forecast, while Hasbro gained 8.8% after lifting its annual revenue and earnings outlook on strong demand for its digital gaming and Magic: The Gathering products.
On the downside, Danaher slumped 11% after trimming its annual core revenue growth forecast and reporting weaker-than-expected biotechnology revenue. MSCI fell 10% after increasing its full-year operating expense forecast despite reporting quarterly revenue above expectations. Genuine Parts declined 2.7% after cutting its full-year profit outlook.
Market breadth remained positive, with advancing stocks outnumbering decliners on both the New York Stock Exchange and Nasdaq. Trading volume, however, was relatively light, with about 16.14 billion shares changing hands compared with the 20-session average of 19.56 billion.
