Chip stocks surge 5%, lifting S&P 500 and Nasdaq ahead of Big Tech earnings

U.S. stocks climbed broadly as semiconductor shares rebounded from last week's selloff and investors positioned for a wave of major technology earnings.

The S&P 500 rose 0.7% and the Nasdaq Composite jumped 1.3%, with the Philadelphia Semiconductor Index gaining 5.2% as chip stocks recovered from recent weakness.

Morgan Stanley predicted memory chip prices could rise 25% on sustained AI demand, a call that helped drive Micron Technology up 10.1% and SK Hynix 10.9% higher. "The AI buildout continues to absorb available supply," analysts at the bank wrote.

The Dow Jones Industrial Average added 0.6%, helped by a 9.8% surge in 3M after the industrial conglomerate reported second-quarter adjusted earnings of $2.40 a share on sales of $6.5 billion, both above estimates, and raised its full-year profit outlook. Caterpillar gained 2.7%, reversing Monday's decline. General Motors slipped 1.3% despite posting adjusted earnings of $3.57 a share on revenue of $48 billion and lifting its full-year guidance. Of the 54 S&P 500 companies that have reported so far, 87% have exceeded profit estimates, according to FactSet.

The rally sets up a critical test this week as Alphabet, Tesla and IBM are scheduled to report, with investors focused on whether AI-related spending plans justify current valuations. Any disappointment could reverse the gains, while strong results may extend the advance into August.

Advanced Micro Devices rose 6.1% without a company-specific catalyst, tracking the broader semiconductor recovery. Nvidia added 1.5% after releasing details of its Vera central processing unit for AI data centers. The VanEck Semiconductor ETF climbed more than 3% in premarket trading before accelerating through the session.

Outside technology, the rally was broad but uneven. MSCI fell 6.7% after its quarterly results failed to meet elevated expectations, while Equifax dropped 8.5% after issuing a weaker-than-expected outlook despite a second-quarter earnings beat. Danaher declined 8.4% as softer bioprocessing revenue overshadowed an earnings beat. Workday slid 4.2% after Morgan Stanley downgraded the stock to underweight, citing slowing growth in its core human capital management business.

Oil prices extended their advance, with Brent crude topping $91 a barrel after tankers reportedly caught fire in the Strait of Hormuz, adding to supply concerns from the ongoing U.S.-Iran conflict. West Texas Intermediate rose 0.8% to $83.90. Gold also gained, with the SPDR Gold Shares ETF rising 1.8%, as some investors hedged against geopolitical risk.

President Donald Trump announced 50% tariffs on most Canadian goods, though the duties take effect in 30 days, leaving room for negotiation. The 10-year Treasury yield edged higher, while the U.S. dollar index was little changed. Diplomatic efforts to de-escalate Middle East tensions continued, with mediators proposing a 10-day ceasefire.

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