The Nasdaq Composite closed at a record for the second straight session on Tuesday, rising 0.4% to 27,244.28, while the S&P 500 finished essentially flat at 7,764.64 and the Dow Jones Industrial Average slipped 0.3% to 51,863.69. The split verdict reflected a market rotating out of industrials and financials and back into the chipmakers and software companies that have driven this year's artificial-intelligence trade.
Memory-chip makers led Tuesday's gains, with Micron Technology up roughly 5% and SanDisk climbing nearly 7%. The advance extended a run in which Advanced Micro Devices crossed a $1 trillion market capitalization for the first time a session earlier, joining Nvidia in the trillion-dollar club before easing slightly on Tuesday as some investors trimmed positions.
The catalyst was Meta Platforms' new AI assistant, Muse, which can draft and send emails and complete purchases and bookings on a user's behalf. Since its launch earlier this month, Muse has climbed to the top of the free app charts on Apple's U.S. App Store, and Wall Street has taken notice.
Meta has a hit on its hands with Muse.
Mark Mahaney, Evercore ISI
The same enthusiasm cut both ways. Shares of companies whose business Muse could automate slid: Uber and Lyft each fell more than 1%, and Charles Schwab dropped 6.1%. "There are a lot of tech stocks that are down today on Muse-related fears," said Jed Ellerbroek, a portfolio manager at Argent Capital Management, pointing to worries the assistant could siphon business from insurers and travel bookers alike.
Yields ease, but stay elevated
The rally came even as bond yields remained higher than they were before this month's Federal Reserve meeting. The 10-year Treasury yield hovered near 4.95% Tuesday, down slightly on the day but still well above pre-summer levels after the Fed on Sept. 16 raised its benchmark rate a quarter point to a range of 3.75% to 4.00%, its first increase since 2023, to combat inflation that Chair Kevin Warsh said had run "too high ... for too long."
Oil provided a second tailwind. Brent crude slid toward $98 a barrel and West Texas Intermediate dropped near $89, both down more than 2%, after Saudi Arabia restarted a pipeline that lets it bypass the Strait of Hormuz and Iran signaled it could reopen the strait within a week. Falling energy costs helped ease pressure on transportation and consumer stocks squeezed by months of elevated fuel prices tied to the war in the Persian Gulf.
President Trump, addressing the United Nations General Assembly in New York, said a broader settlement with Tehran was possible but not imminent. "I believe we'll make a deal right after the election, because it doesn't make sense for them not to," he told delegates, while separately floating a ban on U.S. diesel exports that he said he had "been talking about" internally.
Early third-quarter reports offered a mixed preview of what a broader rally might look like. Auto-parts retailer AutoZone rose 2.7% after beating profit estimates, while recreational-vehicle maker Thor Industries said its dealers and customers were increasingly strained by fuel costs and financing rates, a reminder that the same energy and rate pressures rattling markets are also weighing on Main Street spending.
Breadth remained a concern even as the headline indexes advanced. Only seven of eleven S&P 500 sectors closed higher Tuesday, with communication services and technology far outpacing the rest of the market, while more rate-sensitive corners such as financials and industrials lagged. That narrowness has become a familiar pattern this year, with a small group of AI-linked megacaps accounting for an outsized share of the index's gains.
Investors are now looking to third-quarter earnings, due in earnest next month, with Wall Street consensus estimates projecting roughly 29% profit growth across the S&P 500, a bar that will test whether the AI-fueled rally can broaden beyond a handful of chip and software names. Traders are also watching for the Fed's December meeting, where officials have signaled another quarter-point increase is likely, and for any follow-through on Trump's UN remarks about Iran once the midterm elections have passed.
