US Stocks Rise on AI Mania and Earnings Anticipation

The tech-heavy Nasdaq closed higher on Wall Street as investor excitement around artificial intelligence (AI) grows ahead of earnings reports from megacap technology companies Alphabet and Microsoft. Both companies have recently launched various AI products, which investors believe will help offset a slowdown in their cloud businesses.

Shares in Alphabet, the owner of Google, and Microsoft, the maker of Windows, climbed. The Nasdaq Composite index has been performing well this year due to gains in rate-sensitive megacap growth companies and hopes for an end to the U.S. Federal Reserve’s tightening cycle. Companies outside of the technology sector are also attracting investors as their lower valuations become appealing.

The Dow Jones Industrial Average rose, although gains were capped by a slide in Boeing shares. RTX shares tumbled following an announcement that many of its Pratt & Whitney GTF engines, which power Airbus A320neo jets, will require accelerated removals and inspections. The S&P composite 1500 passenger airlines sub-index was also negatively affected by a fall in Alaska Air’s annual revenue growth outlook, which fell short of expectations.

On a positive note, a survey showed that consumer confidence in the United States increased to a two-year high in July, reflecting optimism about the labor market despite concerns of a potential recession.

Overall, the S&P 500 gained points, while the Nasdaq Composite gained points and the Dow Jones Industrial Average rose points. Most sectors within the S&P 500 remained subdued, but materials stocks saw gains due to rising metal prices following support pledges from a politburo meeting in China.

In terms of specific companies, General Electric saw a jump in stock price after raising its annual adjusted profit forecast. On the other hand, General Motors experienced a slump after posting a decline in adjusted pre-tax profit and margins in its key North American market. 3M Co, an industrial conglomerate, saw its stock rise as it increased its annual adjusted profit forecast.

The earnings for the S&P 500 are now expected to decline by 7.7% for the second quarter.