(Oct 27): The S&P 500 and Nasdaq were set for their biggest one-day gain in more than a month on Monday as tech stocks advanced after Anthropic's IPO filing put artificial intelligence (AI) back in focus at the start of a week packed with corporate earnings and the Federal Reserve's interest-rate decision.
Anthropic disclosed steep losses and red-hot revenue growth in its filing for a US initial public offering (IPO), laying out its ambition to build AI systems capable of reshaping the global economy despite the high costs of developing the technology.
The AI lab is pushing ahead with its listing plans even as a once-busy fall IPO calendar has thinned out, with market volatility prompting companies to delay offerings.
"It's a challenging environment to say the least exactly when this IPO will take place, but there's a lot riding on not only the company, but the AI industry," said Robert Pavlik, senior portfolio manager at Dakota Wealth in Fairfield.
Semiconductor and chip-related companies, widely viewed as some of the biggest winners of the AI boom, were leading the gains. The broader Philadelphia chips index .SOX was up more than 3% after a turbulent few weeks.
Anthropic's filing arrives as investors increasingly scrutinise the payoff from AI spending. About a third of S&P 500 companies are scheduled to report earnings this week, including hyperscalers Alphabet, Microsoft and Amazon.com, whose results would be parsed for signs if the hefty AI investments are translating into growth.
The focus follows a subdued reception to earnings from AI-linked megacaps last week. Meta disappointed investors after raising its annual AI spending forecast again and saying it would sell new stock to help pay for it, while Tesla also came under pressure following its results.
Meta said on Monday it plans to raise up to US$95 billion (RM387.86 billion) in equity to fund its AI-related expansion of data centres, cloud computing power and other infrastructure. Its shares were last up 0.2%.
The AI trade has come under pressure this month amid concerns that debt-funded spending may become harder to justify in the face of rising borrowing costs.
Sentiment, however, improved a bit on Monday as neocloud firms such as CoreWeave and Nebius, which have been at the centre of the AI storm, reversed initial losses to trade higher.
Other AI-linked companies, including photonic product makers Lumentum and Coherent, along with server makers Dell and Hewlett Packard Enterprise, were among the best-performing stocks.
At 11.30am ET, the Dow Jones Industrial Average rose 168.52 points, or 0.32%, to 52,383.68. The S&P 500 gained 70.17 points, or 0.92%, to 7,693.85, while the Nasdaq Composite advanced 325.16 points, or 1.25%, to 26,280.5.
Market breadth was strong, with eight of the 11 S&P 500 sectors trading higher. Information technology and consumer discretionary led the gains.
Megacap and growth stocks were also mostly higher. Tesla jumped 6.3% to a more than three-month high after Barclays upgraded its rating on the stock to "overweight" from "equal-weight".
Crude oil prices eased after hitting a near six-month high last week. On Sunday, Qatari mediators travelled to Tehran as part of an effort to de-escalate regional tensions in coordination with the US.
Elsewhere, the Fed's rate decision is due on Wednesday, with a pause widely expected after its September raise. Traders still see a December hike as firmly possible, and at least two 25-basis-point increases by mid-2027, according to LSEG data.
Both the Fed's preferred inflation gauge — the Personal Consumption Expenditures index for September, and third-quarter GDP, expected to show 3.2% growth — are due on Thursday.
Investors are also monitoring the Nov 3 midterm elections, which will decide control of the US Congress.
Advancing issues outnumbered decliners by a 2.07-to-1 ratio on the NYSE and by a 1.56-to-1 ratio on the Nasdaq.
The S&P 500 posted six new 52-week highs and five new lows, while the Nasdaq Composite recorded 69 new highs and 262 new lows.
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