Key Highlights

  • The Dow gained 514 points while the S&P 500 added 0.4% and the Nasdaq Composite rose 0.2%.
  • 3M and Northrop Grumman each advanced more than 5% after earnings beats, with 3M also raising its full-year guidance.
  • Brent crude fell about 1% to roughly USD 108 a barrel, while West Texas Intermediate traded near USD 103.
  • Korean AI firm Elice tumbled more than 30% in its public market debut, weighing on early tech sentiment.

Earnings Lift the Blue Chips

The Dow Jones Industrial Average rose on Tuesday as a run of upbeat earnings reports and a drop in oil prices overshadowed recent pressure on artificial intelligence related stocks. The blue-chip index gained 514 points, or 1%. The S&P 500 added 0.4%, and the Nasdaq Composite traded up 0.2%.

3M, an industrial and safety products producer, gave the Dow its largest boost, jumping more than 5% after reporting better-than-expected results and raising its full-year guidance. Northrop Grumman, an aerospace and defense company, also advanced more than 5% after posting an earnings beat.

Oil Pullback Supports Sentiment

Oil prices pulled back from earlier gains, which helped investor sentiment. West Texas Intermediate crude futures were last down less than 1% at around USD 103 a barrel, while Brent crude futures fell about 1% to roughly USD 108 a barrel.

The moves in oil added to declines in Treasury yields. The 10-year yield eased to 5.123% on Tuesday, and the 30-year yield fell to 5.44%. Traders continued to monitor developments in the Middle East, where attacks on tankers have kept supply risk in focus.

AI Trade Under Strain, Then Partial Recovery

The market has been weighed down lately by worries about the sustainability of the AI trade, amid debt and demand concerns. Sentiment in technology took a hit earlier in the day after Elice, a Korean AI firm, fell more than 30% overnight in its public market debut. Asia-Pacific markets declined on Tuesday, with the South Korean market among the weaker ones.

AI related stocks recovered some ground as the session went on. Micron Technology, Sandisk and Advanced Micro Devices each rose around 1%. Intel climbed more than 1%, while Seagate Technology and CoreWeave each gained more than 2%.

Monday's Rebound Follows a Rough Week

The S&P 500 finished in positive territory on Monday, while the Nasdaq Composite advanced more than 1%. That marked a rebound from last week's rout, when anxieties about companies borrowing heavily for their AI build-outs intensified.

A head of capital markets at an exchange traded fund provider said the market had spent much of the year looking through higher rates because the AI growth story was strong enough to justify them. Last week, the strategist said, that relationship began to be tested.

Hyperscaler Earnings Come Into View

The same strategist noted that large cloud and AI infrastructure companies report over the next few weeks, setting up the next major stress test for the AI trade. Guidance on returns on investment, data center spending and 2027 capital expenditure may matter more than headline earnings figures, the strategist said.

The earnings season also overlaps with a busy policy calendar. The Federal Reserve meets on October 27 and 28, following its September rate increase to a range of 3.75% to 4%, and CME FedWatch puts the chance of a hold at that meeting at about 85%.