By Stephen Culp and Shashwat Chauhan
NEW YORK, Oct 27 (Reuters) - An AI-fueled tech rally sent US stocks to a higher close on Tuesday as third-quarter reporting season gained steam, while the Federal Reserve convened for its penultimate meeting of the year.
The tech-heavy Nasdaq led the gains.
The buzz surrounding details of Anthropic's impending initial public offering helped boost chip stocks for the third consecutive session.
Growing concerns over the viability of debt-funded spending amid rising
borrowing costs have weighed on the AI trade this month. The Philadelphia SE Semiconductor index, while off more than 20% from its June 22 record closing high, has outperformed the broader market this year.
To fund its AI expansion, Meta increased its largest-ever equity fundraising to $97.5 billion, sending the Facebook parent's shares lower.
"(The Anthropic news) seems to be giving a little bit of a relief rally to the AI stocks, particularly the semis," said Chuck Carlson, CEO at Horizon Investment Services in Hammond, Indiana, referring to chip stocks. "Those stocks have gotten clobbered in recent weeks and they were probably due for a bounce."
Economic data showed rising new orders for computers and peripheral equipment, supporting the notion of strong AI-related spending.
Nearly half of S&P 500 companies have reported third-quarter results. Of those, 83% have delivered better-than-expected results, according to the most recent available LSEG data.
Boeing tumbled following its bigger-than-expected third-quarter loss, while water-management company Xylem slid after trimming full-year forecasts.
United Parcel Service advanced after the package delivery firm raised its annual revenue and profit forecasts.
Sherwin-Williams' quarterly profit miss sent the stock lower, weighing on the Dow.
Royal Caribbean rose after the cruise operator lifted its full-year profit forecast.
Microsoft and Alphabet results are expected on Wednesday, while Amazon.com is due to report on Thursday.
The Fed convened on Tuesday for its October monetary policy meeting, which is widely expected to culminate in a decision to keep the fed funds target rate on hold in the 3.75% to 4% range, saving its second rate hike of the year for its final meeting in December, according to CME's FedWatch tool.
"There seems to be more confidence that the Fed isn't going to do anything at this meeting, partly because we have an election on Tuesday," Carlson added. "There's probably at least some relief that the rate situation is not going to get in the way of a rally."
According to preliminary data, the S&P 500 gained 46.28 points, or 0.60%, to end at 7,723.05 points, while the Nasdaq Composite gained 309.69 points, or 1.18%, to 26,479.08. The Dow Jones Industrial Average rose 25.60 points, or 0.05%, to 52,387.18.
Of the 11 major sectors in the S&P 500, energy shares suffered the steepest percentage decline, hit by easing crude prices as attention turned to Middle East peace negotiations.
(Reporting by Stephen Culp; Additional reporting by Shashwat Chauhan and Utkarsh Hathi in Bengaluru; Editing by Rod Nickel)
