Chipmaker gauge climbs 2.3% as tech stocks lift Wall Street before Fed
A gauge of chipmakers climbed 2.3% as technology stocks lifted Wall Street ahead of earnings from three companies valued at more than US$10 trillion combined, with traders also waiting on the Federal Reserve's rate decision.
The S&P 500 advanced even as most of its constituents fell. Alphabet, Microsoft and Amazon are all expected to report healthy growth this week, but investors are focused on how much the three are spending on artificial intelligence and when that spending will pay off. "It's going to be very interesting to see how these stocks react to their earnings/guidance," said Matt Maley of Miller Tabak. "So far, many tech names have sold off following their reports. Therefore, given how important these companies are to the AI phenomenon, their reactions should be particularly important."
Enthusiasm for the AI trade has returned after weeks of concern about the debt financing the infrastructure buildout. Meta Platforms' US$25 billion stock sale drew demand for about five times the shares on offer, and Broadcom arranged a US$63 billion deal with Bank of America, Blackstone, Citigroup and Morgan Stanley to finance chip purchases for Anthropic. Bitcoin rose 0.6% to US$80,207.51 and Ether gained 1.2% to US$2,329.53.
The Fed, the European Central Bank and the Bank of Japan are all expected to hold rates steady this week. Fed chairman Kevin Warsh, who has avoided guidance on future moves, faces a difficult press conference on Wednesday: he is unlikely to signal December's path but may not want to push markets away from their bet on a hike. US consumer confidence rose unexpectedly in October for the first time in four months, though households remain squeezed by prices and by wage growth lagging inflation.
Brent crude fell below US$115 a barrel and West Texas Intermediate dropped 1.5% to US$100.19, while spot gold rose 0.9% to US$4,052.04 an ounce. The yield on 10-year Treasuries was little changed at 4.99%.
