S&P 500 edges higher as investors await Big Tech earnings
Markets weigh AI investment sustainability against geopolitical tensions and Federal Reserve rate expectations
The S&P 500 edged higher on Wednesday as investors awaited earnings reports from major technology companies to assess the sustainability of the AI-driven market rally. Super Micro Computer surged 23.8% after announcing over $60 billion in new orders for the fourth quarter, lifting peers Dell Technologies and Hewlett Packard Enterprise. Conversely, megacap stocks including Microsoft, Amazon, Apple, and Meta Platforms fell between 0.8% and 2.3%. Geopolitical tensions in the Middle East and rising oil prices added caution, with traders pricing in a high probability that the Federal Reserve will keep interest rates unchanged.
The S&P 500 gained 13.32 points, or 0.18%, to close at 7,522.52, while the Dow Jones Industrial Average increased by 190.81 points, or 0.37%, to 52,415.45. The Nasdaq Composite fell by 8.42 points, or 0.03%, to 25,828.26. The Philadelphia SE Semiconductor index rose 1.4%, though it had closed lower in five of the previous 10 sessions, highlighting fragile sentiment toward the chip sector.
Investors are now looking to second-quarter results from Alphabet and Tesla, the first of the so-called "Magnificent Seven" megacap companies to report after the bell for fresh evidence that these companies' multibillion-dollar investments in AI are paying off. Alphabet will be under particular scrutiny after a delay in the launch of a model central to its AI ambitions intensified concerns. Its shares were flat.
"Companies have to prove not only that they are growing, but that they are worthy of a premium valuation," said Bret Kenwell, U.S. investment analyst at eToro. "Good reports right now are not good enough. They need to be great. And that's the market we're in right now."
Geopolitical tensions in the Middle East, specifically threats to shipping by the Houthi militia, have contributed to oil prices rising to near six-week highs. The Federal Reserve is expected to maintain interest rates steady for the remainder of 2026, with traders pricing in a nearly 72% chance of no change at the next meeting.
