US stock markets closed higher on Tuesday, July 22, with semiconductor shares broadly advancing. The Dow Jones Industrial Average gained nearly 400 points, while the S&P 500 index rebounded after three consecutive sessions of declines. Investors weighed the implications of escalating US-Iran tensions while also focusing on the latest corporate earnings reports.
The Dow rose by 385.56 points, or 0.74%, to close at 52,224.82. The Nasdaq Composite increased by 329.13 points, or 1.29%, finishing at 25,837.21. The S&P 500 gained 65.92 points, or 0.89%, ending the session at 7,509.20.
Industrial giant 3M Co reported second-quarter earnings that surpassed expectations, leading its stock price to surge over 7%. General Motors Co also posted profits ahead of forecasts, driving its shares up approximately 5%. The earnings season has started robustly. According to data from FactSet, among the roughly 54 S&P 500 companies that have reported so far, 87% have exceeded profit expectations.
Major corporations scheduled to report results later this week include Alphabet Inc (the parent company of Google), International Business Machines Corp (IBM), and Tesla Inc.
As companies release their latest financials this week, traders will closely monitor details regarding artificial intelligence spending. They will also listen intently to earnings conference calls to confirm that executives' outlooks for the second half of the year have not become more cautious.
Bret Kenwell, an investment analyst at eToro, stated, "The next two weeks will be crucial for earnings, and not just for tech stocks. The broader message is clear: companies that fail to meet Wall Street's high expectations will be penalized."
He added, "This contrasts sharply with last quarter when uncertainty lowered the bar, and investors were primarily seeking reassurance that geopolitical turbulence had not derailed US corporations. Now, after the stock market has repeatedly hit record highs, even stellar performance may not always satisfy market expectations."
The semiconductor sector also provided a boost to the broader market during early trading. The VanEck Semiconductor ETF (SMH) rose more than 3%. Shares of Marvell Technology Inc, Micron Technology Inc, and Astera Labs Inc were each up around 6% in pre-market activity. Intel Corp gained over 5%.
Tuesday's gains followed a down trading session where market participants were assessing the impact of the escalating conflict between the US and Iran.
For the tenth consecutive night, the US Central Command has conducted airstrikes against Iran since the US president declared the US-Iran ceasefire "over." Meanwhile, forces from Tehran have attacked US military assets in the Middle East, and its Houthi allies have announced a maritime blockade against Saudi Arabia.
Oil prices were volatile on Tuesday as Wall Street focused on a new round of diplomatic efforts to mediate between the US and Iran. Reports indicated that mediators proposed a 10-day ceasefire between the two adversaries. West Texas Intermediate crude futures rose over 1% to above $84 per barrel, while the international benchmark Brent crude futures also gained more than 1%, trading above $90 per barrel.
During Monday's trading session, oil prices moved higher after the US president posted on a social media platform that Tehran would pay for the deaths of three US service members. The rise in energy prices contributed to pulling the major stock indices lower that day, even as semiconductor stocks recovered some of the ground lost in last week's sharp decline.