US stocks ended higher on Tuesday as stronger corporate earnings and a pullback in oil prices supported the Dow Jones Industrial Average, while concerns about artificial intelligence spending weighed on technology shares.
The Dow rose 1.05%, gaining 548 points to close at 52,513.98.
The S&P 500 added 0.31% to 7,714.52, while the Nasdaq Composite slipped 0.03% to 26,421.84, according to preliminary data.
Investors shifted towards healthcare, defensive and value-oriented stocks as they reassessed the outlook for AI-related investments.
The market also monitored developments in the Middle East after oil prices retreated from five-month highs.
Dow gains as healthcare and industrial stocks advance
Healthcare stocks led gains among the S&P 500’s 11 major sectors, with the sector reaching a record high. Eli Lilly, UnitedHealth, Merck, Johnson & Johnson and Amgen supported the broader market, while Moderna climbed to its highest level since 2022.
Defensive sectors, including real estate and utilities, also outperformed, alongside the small-cap Russell 2000 index.
The S&P 500 value index outperformed its growth counterpart, reflecting a shift towards companies outside the technology sector.
Industrial and safety products maker 3M was among the Dow’s strongest performers, with shares rising more than 5% after it reported better-than-expected earnings and raised its full-year profit forecast.
The company also announced an expansion of its data-centre partnership with Amazon and issued a warrant allowing an Amazon subsidiary to purchase 3M shares worth more than $521 million.
Northrop Grumman advanced more than 4% following an earnings beat.
Credit reporting firm Equifax gained after reporting third-quarter profit above analysts’ estimates, while Hasbro shares jumped after the toy company raised its annual revenue outlook.
AI concerns weigh on technology stocks
Technology shares lagged as investors continued to question whether heavy spending on AI infrastructure will generate sufficient returns.
The sector had rebounded on Monday following a selloff last week, but concerns over borrowing costs, demand and monetisation remained.
Sentiment weakened earlier on Tuesday after South Korean AI company Elice Group plunged more than 30% in its market debut.
The decline renewed concerns about valuations across AI-linked businesses and the sustainability of infrastructure investment.
However, some AI-related stocks recovered during the session.
Western Digital gained more than 3%, while Seagate Technology rose more than 2%. CoreWeave and Marvell Technology each advanced nearly 2%.
Declines in major technology companies weighed on the communication services sector.
Meta, Netflix and Alphabet were among its weakest performers as investors prepared for further earnings reports.
General Motors shares also fell after the automaker reported stronger-than-expected quarterly results but warned of pressure from higher commodity costs and lower truck sales.
Oil retreats as investors monitor Middle East tensions
Oil prices pulled back from earlier gains, helping ease pressure on markets.
West Texas Intermediate crude futures were down less than 1% at around $103 a barrel, while Brent crude fell about 1% to roughly $108.
Traders weighed diplomatic efforts involving Iran and Pakistan against continued Houthi attacks on Saudi infrastructure and reports of vessel attacks in the Gulf.
The situation continued to pose risks to regional energy supplies.
Investors are also looking ahead to corporate earnings for further clues about business spending and the economic outlook.
The upcoming results are expected to draw attention to AI investment returns, data-centre spending and capital expenditure plans as investors reassess the sector’s growth prospects.
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