U.S. stocks posted modest gains on Tuesday, as technology shares rebounded from earlier lows and financial stocks also provided support.
After dropping as much as 1.5% at its lows of the session, the S&P 500 information technology sector pared declines and was up about 1% as gains in Nvidia and Apple overcame declines in Microsoft and Oracle .
Worries about artificial intelligence disrupting business models had sparked a selloff in software firms, brokerages and trucking companies the previous week, causing Wall Street’s three main indexes to register their biggest weekly decline since mid-November.
“There’s a lot of different trends going on in terms of where investors want to put money right now and you see that in this market where you just see spikes up and spikes down, on maybe not a daily basis, but on a regular basis,” said Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder in New York.
“The market is looking very short-term here and there will be a return to AI plays being very much in favor.”
Potential risks from Chinese AI players exacerbated the uncertainty. On Monday, Alibaba unveiled a new AI model, Qwen 3.5, designed to independently execute complex tasks.
Even with the rebound in technology names, software stocks remained under pressure, with the S&P 500 software index down 1.6%. CrowdStrike declined 4.4% and Intuit dropped 5.4%.
The Dow Jones Industrial Average rose 154.41 points, or 0.31%, to 49,655.03, the S&P 500 gained 26.17 points, or 0.38%, to 6,862.34 and the Nasdaq Composite gained 112.96 points, or 0.50%, to 22,659.84.
The S&P 500 financials index was the best-performing of the 11 major S&P sectors on the day, with a gain of 1.2%. Gains in banks such as Goldman Sachs and JPMorgan Chase also lifted the Dow.
Consumer staples was among the worst-performing S&P 500 sectors on the session, dragged lower by a tumble of more than 8% in General Mills after the cereal maker cut its annual core sales and profit forecasts.
This week, the personal consumption expenditure report – the U.S. Federal Reserve’s preferred inflation gauge – will be in focus for insights into inflation and how it could impact the central bank’s rate-cut trajectory.
The data follows cooler-than-expected consumer inflation data last week that slightly raised bets on interest-rate cuts this year.
Traders are pricing in a chance of roughly 63% for a rate cut of at least 25 basis points at the Fed’s June meeting, the first with odds above 50%.
Chicago Fed President Austan Goolsbee said the Fed could approve “several more” interest-rate cuts this year if inflation resumes a decline to the central bank’s 2% target, while Governor Michael Barr said that another central bank interest rate cut could come somewhere well down the road amid ongoing risks to the U.S. inflation outlook.
Norwegian Cruise Line rose more than 13%, the best performer on the S&P 500, after activist investor Elliott said it had built a more than 10% stake in the cruise operator.
Fiserv’s shares gained more than 7% after the Wall Street Journal reported that activist investor Jana Partners had taken a stake in the payments company.
Masimo surged 34% after Danaher said it would acquire the pulse-oximeter maker for $9.9 billion, including debt. Danaher shares shed about 3%.
Declining issues outnumbered advancers by a 1.06-to-1 ratio on the NYSE, while on the Nasdaq, advancing issues outnumbered decliners by a 1.08-to-1 ratio.
The S&P 500 posted 40 new 52-week highs and 10 new lows, and the Nasdaq Composite recorded 73 new highs and 197 new lows.
(Reporting by Chuck Mikolajczak in New York; additional reporting by Purvi Agarwal and Twesha Dikshit in Bengaluru; Editing by Pooja Desai and Matthew Lewis)
