By Johann M Cherian and Avinash P
Sept 25 (Reuters) - Wall Street's main indexes inched higher in choppy trading on Friday as AI optimism buoyed sentiment and oil prices eased, while investors monitored efforts to secure a deal to end the Middle East conflict.
Microsoft shares rose 3.3% and were the biggest boost to the S&P 500, after the software giant unveiled several new capabilities in its Copilot app, including a coding tool and an always-on AI agent.
Chip maker Qualcomm gained 5.1% and Nvidia
was marginally higher, while Dell advanced 5%.
AI-related optimism was a key driver this week, aided by Meta's Muse and its integrated device, Charm, gaining traction among young consumers. Some analysts pointed to it as a product of massive spending on the technology. However, the stock eased 3.2% and trimmed weekly gains to about 13%.
"The amount of money being deployed into the economy from AI investment is just so strong, and we haven't even seen the productivity piece of it," said Jamie Cox, managing partner at Harris Financial Group. "There's a little bit of that the market is weighing into the valuation and that's one of the reasons why you really can't get much of a selloff."
At 11:28 a.m. ET the Dow Jones Industrial Average rose 176.76 points, or 0.34%, to 51,526.74, the S&P 500 gained 14.02 points, or 0.18%, to 7,718.15 and the Nasdaq Composite gained 57.69 points, or 0.21%, to 26,997.07.
Declines in seven of the 11 S&P 500 sectors were offset by a 0.8% gain in the heavyweight technology sector — the week's best performer. Both the S&P 500 and the tech-heavy Nasdaq were set for weekly advances.
A report that US and Iranian negotiators continued to explore a phased path out of the war, which would involve Tehran reopening the Strait of Hormuz and Washington lifting its economic blockade, helped market sentiment.
Data also showed strong AI capex boosted demand for key manufactured capital goods, outpacing expectations in August.
Optimism, however, was capped by inflation worries driven by prolonged Iran and Ukraine conflicts and soaring government debt. Brent crude eased early, but was still over $100 a barrel, while the yield on the 10-year Treasury note was at 5.2%.
Against this backdrop, traders see a 66.4% chance of the Federal Reserve increasing interest rates by at least 25 basis points in October, up from around 50% earlier this week, the CME Group's FedWatch Tool showed. Remarks from policymakers, including John Williams and Beth Hammack, are expected later in the day.
President Donald Trump said he had a "very productive meeting" with President Xi Jinping. Trump made it clear to Xi that Chinese help for Iran was unacceptable, said the US ambassador to China.
Akamai Technologies surged 7.3% after an $11.6 billion cloud services deal with AI leader Anthropic. People jumped 9% after a report said MGM Resorts International was discussing a bid for the online services company.
Declining issues outnumbered advancers by a 1.1-to-1 ratio on the NYSE and by a 1.06-to-1 ratio on the Nasdaq. The S&P 500 posted three new 52-week highs and 30 new lows while the Nasdaq Composite recorded 34 new highs and 123 new lows.
(Reporting by Johann M Cherian in Bengaluru and Avinash P; Editing by Arun Koyyur and Joyjeet Das)
