Wall Street rallied Tuesday as semiconductor stocks surged, lifting the Dow 384 points to 52,223.
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Dow jumps 384 points on chip rally ahead of Big Tech earnings
The Dow Jones Industrial Average jumped 384.46 points, or 0.74%, to 52,223.72 as a broad semiconductor rally powered gains across all three major indexes. The S&P 500 rose about 0.7%, while the Nasdaq Composite added roughly 1%.
"Memory prices could rise 25% on continued AI demand," analysts at Morgan Stanley wrote in a note, citing sustained orders from hyperscale data center operators.
Memory chipmakers led the advance. Micron Technology surged 10.1%, SK Hynix jumped 10.9%, and Western Digital climbed nearly 10%. The iShares Semiconductor ETF rose 5.2%, while the Philadelphia Semiconductor Index added 4%. Among chip designers, Advanced Micro Devices gained 6.1% and Intel rose 6%, while Nvidia added 1.5% after releasing details of its Vera CPU for AI data centers.
The rally marks a sharp reversal from last week's sell-off, when the Nasdaq dropped 2.5% and chip stocks tumbled after Taiwan Semiconductor Manufacturing raised its capital expenditure forecast to as much as $64 billion, stoking fears that AI infrastructure spending was becoming unsustainable. Tuesday's rebound suggests investors are re-embracing the AI trade ahead of earnings from the sector's biggest names.
The rally sets the stage for a busy week of Big Tech earnings that will test whether AI infrastructure spending can sustain the semiconductor cycle. Investors also weighed geopolitical crosscurrents: Brent crude topped $91 a barrel after tanker fires in the Strait of Hormuz, and President Donald Trump announced 50% tariffs on most Canadian goods, effective in 30 days.
Industrials Add Support as 3M Extends Rally
Outside technology, the Dow found support from industrial stocks. Caterpillar reversed Monday's decline with a 2.7% gain, while 3M extended a post-earnings rally to 9.8% after beating expectations with bullish second-half guidance. Together, the two industrials contributed more than 230 points to the Dow's advance.
The rally was broad-based, with advancing stocks outpacing decliners on the New York Stock Exchange. The Cboe Volatility Index declined as the session progressed, reflecting easing anxiety after last week's sell-off. Tuesday's advance marked a sharp reversal from the prior session's divergence, when only the Nasdaq managed to close higher.
Cross-Asset Moves Test the Bull Case
In cross-asset markets, Brent crude held above $91 a barrel as geopolitical risk in the Middle East kept energy prices elevated. Gold also gained, with the SPDR Gold Shares ETF rising 1.8%, suggesting some investors hedged their optimism. The 10-year Treasury yield edged lower as traders positioned for the Fed's next policy meeting, where Chair Kevin Warsh is expected to elaborate on his proposed overhaul of the central bank's inflation framework.
This article is for informational purposes only and does not constitute investment advice.
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