Nasdaq Surges as Investors Snap Up AI Stocks Again

Wall Street trended higher on Tuesday (October 27) ahead of the Federal Reserve's upcoming decision. The Dow Jones rose 0.12% to 52,423.99, the S&P 500 climbed 0.68% to 7,728.74, and the Nasdaq surged 1.25% to 26,495.17. Renewed optimism surrounding the AI​​sector bolstered sentiment, while a decline in oil prices further fueled appetite for riskier assets.

Technology stocks and AI-related companies led the gains. Chip stocks rose 3.2% for the third consecutive day, with Broadcom jumping nearly 4%. Tesla also climbed 3.8%, reaching its highest level in over three months. This rally suggests that momentum in the AI​​sector remains intact, further bolstered by the news of Anthropic’s IPO filing, which reignited investor optimism.

Nevertheless, concerns regarding the high costs of AI investment persist. Meta shares fell 0.8% after the company increased its capital-raising plans—through equity—to US$97.5 billion to fund its AI expansion. Investors are increasingly scrutinizing whether these massive, debt-supported investments will yield commensurate growth.

On the economic front, new orders for U.S. manufactured capital goods increased in September, signaling that AI-related investment remains robust. Meanwhile, Brent crude prices fell for the second straight session, though they remain near their highest levels since late April. The decline in energy costs has provided some breathing room for the stock market amid ongoing inflation concerns.

Attention is now shifting toward the Federal Reserve’s decision on Wednesday. The U.S. central bank is expected to hold interest rates steady following last month’s hike, though the market is still pricing in the possibility of further increases through mid-2027. Investors will be closely monitoring the Fed’s statement for insights into the extent of concerns regarding inflation and the potential impact of the U.S.-Iran conflict on monetary policy.

Newsmaker Analysis: The Wall Street rebound continues to be supported by the strong AI theme and declining oil prices; however, its sustainability will largely depend on this week’s earnings reports from Alphabet, Microsoft, and Amazon. If their performance and projected AI spending demonstrate growth potential, tech stocks could see further gains. Conversely, hawkish signals from the Federal Reserve or concerns regarding the financing of AI initiatives could reignite volatility.

Source: Newsmaker.id