US stocks climb as traders parse corporate results

US stocks rose, driven by a rally in some of the biggest technology companies, as investors shifted their focus to corporate results. The S&P 500 Index jumped 0.7% and the Nasdaq 100 gained 1.3%. The Dow Jones Industrial Average climbed 0.2%.

Traders are digesting a slew of earnings reports this week. McDonald’s Corp. shares gained 3.0% as sales picked up in the latest quarter. Walt Disney Co. shares fell 2.7% after it reported third-quarter revenue that came in lower than expected. Lucid Group fell after the electric-vehicle maker lowered its production forecast for the year.

In the technology space, Apple Inc. climbed about 5.1%, posting the biggest daily gain since early May, with President Donald Trump planning to announce that the firm will commit to spending another $100 billion on domestic manufacturing. Super Micro Computer shares dropped after it lowered its fiscal-year revenue forecast. The stock was the worst performer in the S&P 500.

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Advanced Micro Devices Inc. declined after the company failed to deliver a clear outlook for resuming sales in China, a crucial market for the second-largest maker of artificial intelligence processors.

On the tariff front, Trump imposed an additional 25% tariff on Indian goods over its purchases of Russian energy. Switzerland’s president is about to leave Washington without announcing any success in lowering the 39% tariff Trump has put on her country.

The uncertainty around tariffs has resulted in a rush back into the artificial intelligence theme and caused an “extreme divergence” between the TMT sector’s market-cap share and its earnings share of the S&P 500, according to BI strategists Gina Martin Adams and Michael Casper. The combination of soaring capital spending on AI along with tariff-related tumult weighing on non-AI components of the index has led to “renewed bubble risk,” they said.

Equities and the Economy

Federal Reserve Bank of Minneapolis President Neel Kashkari said on Wednesday that a slowing of the economy may make a rate cut appropriate in the near term. In the past few days, traders have had to contend with a weaker-than-expected jobs report and data showing a deterioration in the services sector.

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Some stock bulls have another reason to worry that the rally in American equities may be about to cool. The Bloomberg Intelligence Market Pulse Index pushed to a “manic” reading last month, a sign that investor exuberance may be running too hot. The measure combines six metrics like market breadth, volatility and leverage to deliver a reading on investor sentiment. When it gets into overheated territory, returns tend to weaken in the following three months.

But Goldman Sachs’ macro traders say the market will likely ignore worries over the US economy and will instead focus on strong liquidity and structural growth themes, such as artificial intelligence and fiscal credit expansion.

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