AI Stocks Boost Wall Street Amid Rising Oil Prices and Corporate Earnings

Wall Street experienced gains on Tuesday, with the S&P 500 climbing 0.9% and the Nasdaq composite rising 1.4%. The Dow Jones Industrial Average was up 0.7%, or 361 points, as of 2:14 p.m. Eastern time. The advance was largely propelled by makers of computer chips and other companies benefiting from the artificial-intelligence boom.

AI stocks, which had experienced pressure in recent weeks after significant gains, rose for a second consecutive day. Concerns had emerged that these stocks had risen too quickly and that investment in AI might not yield the expected profits and productivity. Micron Technology jumped 12.7%, and Nvidia added 1.5%, becoming key drivers of the S&P 500's upward movement.

These gains occurred despite a continued rise in oil prices. Brent crude oil briefly neared $92 per barrel, its highest in over five weeks, trading at $91.01 after a 2% increase. This surge is attributed to ongoing tensions between the United States and Iran, with prices rising from less than $72 earlier in the month. Higher oil prices pose a risk of reaccelerating inflation, potentially prompting central banks to raise interest rates, which could slow economic growth and impact stock valuations.

The yield on the 10-year Treasury note edged up to 4.63% from 4.60% on Monday, compared to 3.97% before the conflict involving Iran began.

Corporate earnings reports also contributed to the market's strength. 3M climbed 6.9% after exceeding analyst expectations for both profit and revenue, and it raised its full-year profit forecast. Hasbro rallied 7.9% after its Magic: The Gathering game surpassed $500 million in quarterly revenue for the first time, prompting the toy maker to increase its annual revenue forecast.

General Motors saw a 4.8% increase after its latest quarterly profit and revenue surpassed analyst estimates, with CEO Mary Barra noting strong demand in North America. Conversely, Danaher slid 11.4% despite beating profit and revenue expectations, as its forecast for underlying revenue growth in the upcoming quarter fell short of Wall Street's projections.

Homebuilder D.R. Horton slipped 0.8% despite exceeding profit and revenue expectations. Executive Chairman David Auld cited affordability concerns and buyer caution in the housing market. Elevated mortgage rates, currently at their highest level in nearly a year due to higher Treasury yields, may necessitate D.R. Horton offering more incentives, potentially affecting its profits.

Globally, stock markets showed modest gains in Europe, with the UK's FTSE 100 adding 0.6%. In Asia, stock markets were mixed. South Korea's Kospi jumped 3.6%, driven by strong performances from Samsung Electronics and SK Hynix, both significant beneficiaries of the AI boom. Tokyo's Nikkei 225 climbed 3.3%, while Shanghai's index rose 1.8%. Hong Kong's market edged down by less than 0.1%.