U.S. stock indexes muscled higher Thursday, led by companies delivering bigger profits that helped offset concerns about AI spending and rising bond yields. The S&P 500 rose 0.3% after erasing an early-morning loss and pulled closer to its all-time high set last week, with the Dow Jones Industrial Average jumping 556 points, or 1.1%, to 52,177.69 and the Nasdaq composite adding 20.16 points, or 0.1%, to 26,713.03. According to latest reports, expectations are high for growth in profits from all kinds of companies this reporting season, which began in earnest this week, allowing U.S. stocks to set records despite high inflation and other market worries. As per The Economic Times, investor confidence in the market is wavering due to recent declines in AI-linked stocks and semiconductor firms, with upcoming quarterly results from major players being closely monitored by investors.
Marsh & McLennan helped lead the way and rallied 4.6% after the insurance and professional services firm reported a stronger profit for the summer than analysts expected. As reported by Devdiscourse, JPMorgan Chase shares rose around 2%, while Goldman Sachs gained approximately 1%, providing significant support to the Dow's advance. Bank of New York Mellon rose 3.2% after reporting a stronger profit than analysts expected, with CEO Robin Vince noting BNY saw strength across its regions. The banking sector's strong performance helped the Dow buck the broader market trend, rising more than 1% over the same period while other major US indexes faced pressure from technology sector weakness.
Despite the overall market gains, AI stocks remained volatile with Nvidia, the chip company that's ridden the AI boom to become Wall Street's most valuable company, falling 1.8% and serving as the heaviest weight on the S&P 500. The company came into the day with a nearly 1,415% gain since the end of 2022, but losses moderated as the day progressed after reaching an early-morning low of 3.8%. Taiwan Semiconductor Manufacturing Co.'s stock that trades in the United States dropped as much as 5.3% in the morning before finishing with a more modest loss of 1.8%. The bellwether for the AI industry reported a profit for the latest quarter that topped analysts' high expectations, with Chief Financial Officer Wendell Huang expecting strong demand to continue in the final three months of 2026. According to The Economic Times, stumbles in the market-leading AI trade are set to test investor confidence as Wall Street focuses on quarterly results from key players including Meta Platforms, which highlights the upcoming week of quarterly reports.
The rally came as Treasury yields fell, with the yield on the 10-year Treasury sinking to 5.09% from 5.19% late Wednesday, as investors were willing to pay higher prices to buy U.S. government bonds. Treasurys have a reputation as a safer investment, and investors often flock to them when feeling nervous. The yield had topped 5.30% earlier this month and touched its highest level since 2002 because of worries about high inflation, signals of a strong U.S. economy and other factors. Companies are pouring money into AI technology in hopes of bigger profits and improved productivity, but data centers and AI chips cost money, and many companies have been borrowing the cash to get them. Now, after yields in bond markets worldwide hit their highest levels in years and made borrowing money more expensive, worries are rising about how resilient that boom in spending can be.
The contrasting performance highlights continued volatility in AI-related stocks, with CoreWeave, which offers AI computing power to customers over the cloud, falling as much as 9.5% in the morning after tumbling 15.5% a day earlier. However, it later flipped to a gain and finished 5.9% higher, showing the ongoing uncertainty in the AI infrastructure sector. The pullback in memory chip stocks earlier this week on rising fears of Chinese competition and concerns over CoreWeave's debt provided investors with an excuse to cut exposure to all AI-adjacent companies. According to The Economic Times, worries rippled through markets over risks tied to the financing of the AI build-out boom, which has lifted profits for a wide swath of companies and boosted economic growth. Meta Kicks Off Hyperscaler Results as massive outlays on AI data centers and infrastructure underpin the profit jump, with Meta being one of five AI hyperscalers that combined are expected to increase their capital spending to about $1.2 trillion next year, according to Goldman Sachs.
