The Dow Jones Industrial Average rose 1.4% in Tuesday’s stock market trading. The S&P 500 gained 0.9%. The Nasdaq Composite climbed 0.7%. The small-cap Russell 2000 index advanced 2.1%.
The Dow Jones and S&P 500 moved above the intraday highs from last Thursday’s downside reversal. The S&P 500 did so briefly. The Nasdaq has not yet done so.
The stock market delivered an impressive performance at a critical moment. The Nasdaq fell more than 1% shortly after the open as Nvidia and AMD shares sold off on concerns about Google’s AI chips. However, the indexes rebounded, led by the Dow Jones and small-cap stocks, reclaiming the 50-day moving average and closing near session highs.
The stock market posted a strong gain on Tuesday, with the major indexes and the small-cap Russell 2000 reclaiming the 50-day moving average despite weakness in Nvidia (NVDA) and Advanced Micro Devices (AMD).
Economic Data
Retail sales rose 0.2% month-over-month in September after a 0.6% increase in August. Excluding autos, retail sales increased 0.3%, in line with expectations, after August’s gain was revised down to 0.6% from 0.7%.
The Producer Price Index (PPI) for September increased 0.3% MoM, matching forecasts, mainly driven by a 0.9% rise in goods prices — the strongest since February 2024 — while services were flat. Annual PPI inflation remained at 2.7%. Core PPI rose only 0.1%, below expectations (0.2%), with the YoY rate at 2.6%. Energy prices surged (+3.5%), especially gasoline (+11.8%), serving as the primary driver of the increase. Transportation and warehousing services rose, offsetting a slight decline in trade margins.
The U.S. Pending Home Sales Index rose 1.9% MoM in October, beating expectations of -0.4%, while September remained unchanged. The index fell 0.4% year-over-year. Pending home sales increased in the Northeast, Midwest, and South in October but declined in the West. YoY, only the Midwest and South saw gains. The Midwest led thanks to better affordability, while the West weakened due to excessively high home prices. Job gains in September helped support confidence in future home-buying.
Nvidia, AMD plunge on Google concerns
Alphabet Inc. (GOOG) is reportedly in talks with Meta Platforms (META) to use its Tensor AI chips, increasing competitive pressure on Nvidia and AMD.
NVIDIA (NVDA) struggled today after a report from The Information said Alphabet (GOOG) is ramping up its efforts to compete with NVIDIA in AI chips.
Advanced Micro Devices (AMD) fell even more, though it recovered significantly from an early-session decline of nearly double digits.
AMAT upgraded by UBS
AMAT shares rose 5% after UBS upgraded the stock to Buy and raised its price target to $285, citing strong prospects in memory equipment.
UBS forecasts wafer-fab equipment spending in 2026 to grow more than 20% YoY to $136.5 billion — driven mainly by DRAM — and to reach $145 billion in 2027, well above market expectations.
UBS believes AMAT will be the biggest beneficiary of the DRAM spending cycle. It also expects China’s wafer equipment demand in 2026 to be much stronger than current estimates. UBS projects 2027 EPS of around $13, far above Wall Street’s expectation of $11.56
