The stock market finished Tuesday's session on a mixed note, with a rebound in semiconductor and mega-cap technology stocks lifting the S&P 500 (+0.4%) and Nasdaq Composite (+0.8%), while the DJIA (-0.4%) ended lower. The gains represented a partial recovery from Monday's technology-led selloff, although participation was considerably weaker than yesterday, when strength across much of the broader market contrasted with pronounced losses in technology stocks.

The major averages traded in relatively narrow ranges for much of the morning before the S&P 500 and Nasdaq reached their session highs early in the afternoon, climbing as much as 0.7% and 1.2%, respectively. Some of that strength faded later in the session as semiconductor stocks surrendered a portion of their earlier gains. The DJIA remained in negative territory throughout the day, reflecting the uneven nature of the rebound.

The information technology sector (+1.3%) led the four S&P 500 sectors that finished higher, supported by renewed buying interest in semiconductor stocks following Monday's sharp retreat. The PHLX Semiconductor Index (+2.6%) recovered a substantial portion of yesterday's 3.4% decline, although it finished below its best levels of the session. NVIDIA (NVDA 206.69, +4.63, +2.29%) was among the mega-cap standouts, while Advanced Micro Devices (AMD 483.90, +17.06, +3.65%) also rallied ahead of its quarterly earnings report after today's close.

AMD's results represent another important test for the AI trade following recent concerns about elevated infrastructure spending and growth expectations. Investors will be particularly focused on the company's Q4 outlook, Data Center revenue growth, supply availability, and the ramp of its Helios AI infrastructure platform.

The technology sector's advance came despite earnings-related weakness in Apple (AAPL 331.90, -6.42, -1.90%) and Palantir Technologies (PLTR 175.40, -2.94, -1.65%). Apple declined despite reporting better-than-expected quarterly results and strong iPhone and Mac sales, as concerns about slowing Services revenue growth, rising memory costs, and additional AI development expenses overshadowed the results. Palantir also faced selling pressure despite strong earnings and upbeat guidance, with investors focusing on a sharp slowdown in bookings growth.

The industrials sector (+1.0%) was another notable outperformer, benefiting from strength in electrical equipment and power infrastructure companies alongside the semiconductor rebound. GE Vernova (GEV 918.20, +55.95, +6.49%) and Bloom Energy (BE 214.01, +17.76, +9.05%) were among the standouts, reflecting continued investor interest in companies positioned to benefit from the expansion of AI infrastructure.

The communication services sector (+0.9%) also finished higher, aided by strength in Meta Platforms (META 621.03, +14.30, +2.36%). The company reportedly plans to raise at least $20 billion in an upcoming bond sale, according to The Wall Street Journal, highlighting the substantial financing requirements associated with AI infrastructure development. The Vanguard Mega Cap Growth ETF (+0.9%) reflected the broader recovery among large growth-oriented companies, while the real estate sector (+0.2%) was the only other S&P 500 sector to finish in positive territory.

Outside these areas, the broader market struggled to participate in the advance. The materials (-1.9%) and consumer staples (-1.8%) sectors were the biggest laggards, reversing some of their outperformance from Monday's session. The consumer staples sector faced additional pressure from disappointing earnings-related developments, with Sysco (SYY 74.11, -7.63, -9.33%) and ADM (ADM 70.60, -5.17, -6.82%) declining following weaker-than-expected quarterly revenue. Keurig Dr Pepper (KDP 34.74, -2.08, -5.65%)) also traded lower despite beating earnings and revenue expectations, as concerns about a slower recovery in its U.S. coffee business weighed on sentiment.

The narrow leadership was particularly evident in the S&P 500 Equal Weighted Index (-0.4%), which underperformed its market-cap-weighted counterpart after outperforming substantially yesterday. The Russell 2000 (+0.2%) and S&P Mid Cap 400 (+0.2%) managed to finish modestly higher, although both surrendered the bulk of their earlier gains as buying interest faded across the broader market.

Crude oil experienced a volatile session, initially recovering some of Monday's steep decline overnight before retreating sharply in the morning. Prices subsequently recovered from their session lows, with WTI crude ultimately settling $0.35 lower (-0.4%) at $96.16 per barrel. The energy sector (-0.8%) was among the relative laggards.

Tuesday's trading reinforced the market's rapidly shifting leadership, with investors returning to semiconductor and AI-related stocks just one day after those same groups suffered substantial losses. The rebound provided enough support to lift the S&P 500 and Nasdaq, but weakness across most sectors and the underperformance of the equal-weighted index underscored the limited breadth of the advance. With AMD's earnings due after the close and additional corporate results on Wednesday's calendar, investors will be looking for further evidence that AI infrastructure demand can support elevated growth expectations and substantial capital investment commitments.

U.S. Treasuries pulled back from their recent strength on midterm Election Day with longer tenors leading the retreat after outperforming on Monday. The 2-year note yield settled up three basis points to 4.62%, and the 10-year note yield settled up six basis points to 4.95%. 

• Russell 2000: +13.3% YTD
• S&P Mid Cap 400: +12.0% YTD
• S&P 500: +10.6% YTD
• Nasdaq Composite: +9.2% YTD
• DJIA: +7.8% YTD

Reviewing today's data: 

• Factory orders increased 1.8% month-over-month in September (Briefing.com consensus: 1.2%) following an upwardly revised 0.3% increase (from 0.1%) in August. Excluding transportation, factory orders increased 1.3% on the heels of a 0.4% increase in August. Shipments of manufactured goods jumped 1.3% after a 0.1% increase in August.
  • The key takeaway from the report is that the increase in new order activity was broad-based in September. Orders for transportation equipment, primary metals, fabricated metal products, machinery, and computers and electronic products were all up month-over-month.
• Sep JOLTs - Job Openings 7.523M (Briefing.com consensus 7.100M; Prior 7.190M revised from 7.079M)