Nasdaq leads Wall Street gains as SpaceX, Super Micro boost AI sentiment

By Sinéad Carew and Purvi Agarwal

Oct 21 (Reuters) - The tech-heavy ‌Nasdaq led Wall Street ​to a higher ​close on Wednesday after quarterly results from SpaceX and Super Micro Computer improved investor appetite for artificial intelligence-related stocks while weakness in communication services stocks capped gains.

SpaceX shares finished up 7.8% after Elon Musk's rocket and space technology firm posted its first profit as ‌a public company. Musk said, following the report, that a merger of SpaceX and Tesla would be "a good idea," ⁠also boosting Tesla shares.

Elsewhere in earnings, Super Micro shares jumped 9.6% and it was among the S&P 500's top gainers after the AI server maker forecast quarterly revenue and profit margin above ‌Wall Street estimates, signaling that AI demand remained ‌resilient. The report also benefited peers HPE, which rose 3.7%, and Dell, which rose 5.3%.

The reports provided some reassurance to investors who have been worried about the sustainability of massive spending on AI buildouts and their profitability. The technology sector was hammered last week by a selloff in AI-linked ​stocks, with data center operator CoreWeave at the center of the storm.

The SpaceX news "pushes back on some of the investor worries" about AI along with some help from Super Micro, according to Angelo Kourkafas, senior global strategist at Edward Jones.

Kourkafas said the reports will not "answer all the questions investors ⁠have on returns on AI investments, but it's a good start."

As a result, the S&P 500 Information Technology index finished up 1.6%, the biggest gainer among the S&P 500's 11 major industry sectors.

"It's really ​a positive technology story for almost anyone that is somewhat involved in the artificial intelligence ecosystem," said Marc Dizard, chief investment officer at Huntington Bank.

"The technology market reaction has been a reaffirmation that the artificial intelligence trade is still ​intact," he added.

However, Dizard said sentiment can quickly shift around AI and that investors ‌will seek reaffirmation when they monitor earnings reports from other companies.

Shares in Meta rose 3% in late trading after it released its quarterly results following the regular session's close. After finishing up 3.4% in the regular session, Tesla shares rose another ⁠1.6% following its report, which was also issued after the close.

The Dow Jones Industrial Average rose 360.21 points, or 0.69%, to 52,856.09, the S&P 500 gained 44.60 points, or 0.58%, to 7,757.17 and the Nasdaq Composite gained 278.04 points, or 1.05%, to 26,702.86.

Within technology, one of the strongest areas was chips with a 2% rally in the Philadelphia Semiconductor ⁠index, which has had a volatile month so far including an eight-session selloff.

Gains in the benchmark S&P 500 were limited however by a 1.3% decline in communication services stocks. The biggest ​losers included telecom operators such as AT&T, which sank 6.5% even as it beat third-quarter revenue and profit expectations.

The SpaceX results, along with a recent wireless spectrum purchase, fanned fears that it could become a formidable competitor in telecoms, according to Dizard. T-Mobile US shares fell 2.5% and Verizon Communications lost 2.2%.

Also in communications services, Netflix shares sank ‌5.3% after the video streaming company issued a weaker-than-expected forecast for its fourth-quarter profit. Google's parent Alphabet also declined 1.6%.

Abbott Laboratories shares dropped 1.9% after the medical device maker cut its 2026 sales growth forecast.

Advancing issues outnumbered decliners by a 1.37-to-1 ‌ratio on the NYSE where there were 131 new highs and 221 new lows. On the Nasdaq, 2,690 stocks rose and 2,068 fell as advancing issues outnumbered decliners by a ⁠1.3-to-1 ratio.

The S&P 500 posted 26 new 52-week highs and 3 ‌new lows while the Nasdaq Composite recorded 53 ​new highs and 216 new lows.

On US exchanges roughly 16.11 billion shares changed hands compared with the 17.10 billion average for the last 20 sessions.

(Reporting by Sinead Carew in New York, Purvi Agarwal and Tharuniyaa Lakshmi in Bengaluru; Editing by Maju Samuel ‌and David Gregorio)

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