Wall St rises as Anthropic's IPO filing sharpens focus on AI trade
By Shashwat Chauhan and Utkarsh Hathi
Oct. 26 (Reuters) - Wall Street's main stock indexes rose slightly on Monday, led by gains in technology stocks. Investors were looking at Anthropic's plans to sell shares to the public for the first time, as they prepared for a busy week of company earnings reports and the Federal Reserve's interest-rate decision.
Anthropic reported large losses but very fast revenue growth in its filing to sell shares to the public in the United States. The company said it aims to build AI systems that could change the global economy, even though developing this technology costs a lot of money.
The AI research company is moving forward with its plans to go public, even though fewer companies are planning to sell shares this fall. Market ups and downs have led some companies to delay their share sales.
"It's a challenging environment, to say the least exactly when this IPO will take place, but there's a lot riding on not only the company, but the AI industry," said Robert Pavlik, a senior portfolio manager at Dakota Wealth in Fairfield.
Companies that make semiconductors and related chips, which are widely seen as some of the biggest winners from the AI boom, led the market gains. The wider Philadelphia Semiconductor Index rose about 1% after several weeks of sharp market swings.
Anthropic's filing came as investors are looking more closely at whether spending on AI will bring enough returns. About one-third of S&P 500 companies are due to report their earnings this week. These include Alphabet, Microsoft and Amazon.com, three large technology companies that spend heavily on cloud computing and AI. Investors will closely examine their results for signs that these large AI investments are helping their businesses grow.
This attention follows a weak response to earnings from major companies linked to AI last week. Meta disappointed investors after raising its forecast for yearly AI spending again. It also said it would sell new shares to help pay for that spending. Tesla's shares also faced pressure after the company reported its results.
Meta said on Monday that it plans to raise up to $95 billion by selling shares to pay for its AI expansion. The money will support data centers, cloud computing capacity and other infrastructure. Meta shares were last down 1.8%.
AI-related stocks have faced pressure this month because investors worry that companies may find it harder to justify spending funded by borrowing as borrowing costs rise.
CoreWeave, a company that provides cloud computing services using large numbers of AI chips, fell 2%, while Nebius dropped 4.8%. Their shares fell after Elon Musk wrote on X that markets had "almost entirely shut off access to money" for companies that do not earn substantial revenue from sources other than AI data centers. He also predicted that companies in this type of cloud computing business would merge or combine.
At 9:55 a.m. ET, the Dow Jones Industrial Average had risen 236.42 points, or 0.45%, to 52,451.58. The S&P 500 had gained 43.20 points, or 0.57%, to 7,666.88, while the Nasdaq Composite had risen 119.43 points, or 0.46%, to 26,074.96.
Most stocks were rising, with 10 of the 11 sectors in the S&P 500 trading higher. Consumer discretionary stocks, which include businesses that sell non-essential goods and services, and industrial stocks led the gains.
Shares of large technology companies and other growth companies had mixed results. Tesla jumped 5.9% to its highest level in more than three months after Barclays raised its rating on the stock from "equal-weight" to "overweight." This means the bank now expects Tesla to perform better than it had previously expected compared with other stocks.
Crude oil prices fell slightly after reaching a high not seen in almost six months last week. On Sunday, mediators from Qatar traveled to Tehran as part of efforts to reduce regional tensions, working with the United States.
The Federal Reserve is due to announce its interest-rate decision on Wednesday. Most people in the market expect it to leave rates unchanged after raising them in September. However, traders still see a rate increase in December as a strong possibility. According to LSEG data, they also expect at least two increases of 0.25 percentage points each by the middle of 2027.
The Personal Consumption Expenditures index, the Fed's preferred measure of inflation, for September is due on Thursday. The latest estimate of third-quarter economic growth is also expected that day, with the economy forecast to have grown by 3.2%.
Investors are also watching the US midterm elections on November 3, which will decide which party controls Congress.
On the New York Stock Exchange, rising stocks outnumbered falling stocks by a ratio of 1.73 to 1. On the Nasdaq, the ratio was 1.25 to 1.
The S&P 500 recorded three new highs and three new lows for the past 52 weeks. The Nasdaq Composite recorded 44 new highs and 180 new lows.
(Reporting by Shashwat Chauhan and Utkarsh Hathi in Bengaluru; additional reporting by Anand Gopal; editing by Shilpi Majumdar)