Wall Street’s main indices have inched higher as renewed artificial intelligence optimism and strong corporate earnings bolstered markets battered by constant back-and-forth over the resolution of the Middle East conflict.
JP Morgan raised its year-end target for the S&P 500, citing AI and tech-driven earnings, while Amazon said on Monday it will invest up to $US25 billion ($A35 billion) in Anthropic, signalling big tech firms are still willing to pour money into AI.
Amazon shares rose 2.0 per cent, helping the S&P 500 consumer discretionary sector jump nearly 1.0 per cent to become the biggest gainer on the benchmark.
A 0.5 per cent decline in the healthcare sector limited gains in the S&P 500.
Investors are also awaiting the Senate confirmation hearing for Kevin Warsh, US President Donald Trump’s nominee to lead the Federal Reserve.
Republican Senator Thom Tillis has promised to block the confirmation until the Department of Justice ends an investigation into Fed chair Jerome Powell that Tillis says threatens the central bank’s independence.
The hearing could have far-reaching implications for monetary policy, especially as Trump has vowed to fire Powell if he does not leave when his term ends in May.
In early trading on Tuesday, the Dow Jones Industrial Average rose 309.83 points, or 0.63 per cent, to 49,752.39, the S&P 500 gained 12.30 points, or 0.17 per cent, to 7,121.44 and the Nasdaq Composite gained 34.10 points, or 0.14 per cent, to 24,438.49.
Despite the uncertainty, AI hopes and upbeat earnings prevented investors from retreating to the sidelines.
Of the 48 companies in the benchmark S&P 500 index that reported earnings as of last Friday, 87.5 per cent surpassed analysts’ estimates compared with a long-term average of 67.4 per cent, according to LSEG data.
The earnings have been strong and are overpowering the narrative, said Thomas Hayes, chairman at Great Hill Capital.
UnitedHealth jumped 9.2 per cent after the healthcare conglomerate raised its annual profit forecast and beat Wall Street expectations for the first quarter.
The stock was the biggest boost to the blue-chip Dow.
Peers CVS Health and Humana rose 1.7 per cent and 5.2 per cent respectively.
GE Aerospace fell 3.1 per cent.
The company said it was bracing for a tougher backdrop of elevated oil prices, fuel supply constraints and slower global growth.
Markets have been pulled in opposite directions by a torrent of conflicting headlines in recent days.
On Friday, Iran’s vow to reopen the Strait of Hormuz – a crucial waterway for oil shipping – briefly sparked hopes for de-escalation, which quickly faded over the weekend when Iran fired what appeared to be warning shots at vessels and the US military seized an Iranian cargo ship.
In an interview with CNBC on Tuesday, Trump said the US would end up with a “great deal” with Iran.
However, uncertainty around the end of the two-week ceasefire loomed.
Alaska Air fell 1.3 per cent as the airline withdrew its full-year profit forecast.
Apple was among the other stocks under the spotlight, falling 0.5 per cent after the company said CEO Tim Cook would hand over the reins to longtime hardware boss John Ternus.
Separately, data showed that US retail sales increased more than expected in March.
Advancing issues outnumbered decliners by a 1.44-to-1 ratio on the NYSE and by a 1.07-to-1 ratio on the Nasdaq.
The S&P 500 posted 41 new 52-week highs and 2 new lows while the Nasdaq Composite recorded 100 new highs and 23 new lows.
https://thewest.com.au/business/markets/wall-street-gains-on-ai-earnings-momentum-c-22173919
