US stocks rose on Tuesday, driven by a tech-led rally as investors embraced AI optimism following last week’s market gloom, Reuters reported. The broader market gains found support from lower oil prices and a steady bond market, even as attention shifted toward the Federal Reserve’s upcoming policy decision.
AI-Led Momentum Lifts Core Capital Goods and Equity Indexes
The persistent artificial intelligence investment boom continued to push US core capital goods orders and shipments higher in September. Sector performance on the S&P 500 showed six sectors advancing and five declining, with technology shares climbing 1.5% and the ‘SOX’ chip index jumping 3.6%. Individual movers included Dell and Super Micro Computer, which both gained 7.5%, while energy shares slipped 2% as West Texas Intermediate oil dropped about 1.7% to trade below $100 a barrel.
Hyperscalers Prepare Third-Quarter Earnings Amid Heavy Spending
Three major US hyperscalers—Microsoft, Alphabet, and Amazon—are scheduled to report third-quarter earnings this week. Alphabet and Microsoft report after the market close on Wednesday, while Amazon follows on Thursday. Market participants are closely watching cloud growth forecasts and timelines for converting massive capital expenditure into profit. These three companies plan to spend as much as $600 billion this year, backed by nearly $1.7 trillion in combined backlog, though investor tolerance for capital outlays that risk shrinking free cash flow remains sensitive.
Federal Reserve Policy Decision Awaited by Rate Traders
Interest rate futures traders have priced in a 90% probability that the Federal Reserve will leave interest rates on hold at the conclusion of its two-day meeting on Wednesday. Bank of America economists stand apart with a forecast for a rate hike, though their rates strategy team notes that the Fed has never raised rates with market pricing this low so close to a meeting since 2009. Real US interest rates remain among the highest in the developed world, with GDP growth expected to settle just above 2% before slowing.
Common Market Questions About Recent Trading Activity
What probability are traders assigning to a Federal Reserve rate change?
Interest rate futures traders are pricing in a 90% probability that the central bank will leave interest rates unchanged at the conclusion of its two-day meeting.
How much capital expenditure are major US hyperscalers planning this year?
Microsoft, Alphabet, and Amazon plan to spend as much as $600 billion combined this year, supported by nearly $1.7 trillion in total backlog.
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