On Tuesday, U.S. stocks saw gains, prompted by a renewed understanding of the potential benefits within the artificial intelligence sector.
The S&P 500 advanced by 0.8%, recouping almost three-quarters of its previous losses. Concurrently, the Dow Jones Industrial Average increased by 370 points, or 0.8%, and the Nasdaq composite recorded a 1% rise.
Meta Platforms Inc. was a key market driver, surging 8.8% following the announcement of a multiyear agreement to purchase custom chips from Advanced Micro Devices (AMD). This deal also grants Meta the option to acquire up to 160 million AMD shares at 1 cent per share, contingent on the volume of chips purchased.
This development underscored the enthusiasm generated in recent years by the substantial investments in AI, which holds the promise of transforming global industries and fostering a more efficient economy.
The positive news also marked a significant reversal from the previous day’s market downturn, which had unsettled Wall Street, especially impacting companies and sectors perceived by investors as vulnerable to obsolescence. Diverse industries, including software, trucking logistics, and financial services, have recently experienced abrupt and severe investor backlash due to perceived threats.
Salesforce Inc. climbed 2.7%, partially recovering from its 13.1% decline on Monday, which represented its steepest fall since 2000.
The negative sentiment also extended to the private-equity sector, where concerns grew regarding the repayment prospects of loans extended to software firms reliant on recurring revenue. Blue Owl Capital saw a 2.8% increase, reducing its year-to-date loss to 28.2%.
Tuesday also saw Anthropic introduce new business-focused tools for its Claude AI assistant, spanning applications from human resources and engineering to investment banking.
According to Dan Ives, a Wedbush analyst, this development indicated that concerns regarding AI replacing existing software, rather than simply enhancing its utility, might be exaggerated. Ives stated, “While these use cases are impressive, the reality is that these new AI tools will not rip and replace existing software ecosystems and data environments with these AI tools only as useful as the data it can reach.”
Among the new tools, one enables the integration of financial market data from FactSet into Claude. FactSet Research Systems’ stock surged 5.9%, marking one of the S&P 500’s largest gains, despite remaining down 30.6% year-to-date.
Other companies significantly impacted by concerns over AI competition also managed to reduce their annual losses. Adobe Inc. advanced 4.1%, and Workday Inc. increased by 3.3%.
Beyond AI-related anxieties, major U.S. corporations largely continued to report stronger-than-anticipated profits for the close of 2025.
Palo Alto Networks Inc. surged 23.1%, achieving the largest gain in the S&P 500, after surpassing analysts’ profit and revenue forecasts for the recent quarter. The company also projected a roughly 30% year-over-year revenue increase for the current quarter.
Home Depot Inc. climbed 2% after similarly reporting better-than-expected profit and revenue, despite what CEO Ted Decker described as “ongoing consumer uncertainty.”
In summary, the S&P 500 increased by 52.32 points, closing at 6,890.07. The Dow Jones Industrial Average gained 370.44 points, reaching 49,174.50, and the Nasdaq composite advanced 236.41 points to 22,863.68.
Internationally, European stock indexes showed mixed results, with generally modest fluctuations.
Asian markets experienced more pronounced movements. South Korea’s Kospi rose 2.1%, whereas Hong Kong’s Hang Seng declined 1.8%. Shanghai stocks increased by 0.9% after resuming trading post a week-long holiday.
Within the bond market, Treasury yields remained largely stable following a report indicating that by more than economists had anticipated. The 10-year Treasury yield stayed at 4.03%, consistent with its late Monday close.
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Contributions were made by AP Business Writers Matt Ott and Elaine Kurtenbach.