Technology stocks propel US markets to higher close

Equities ended Wednesday in positive territory, paced by the Nasdaq Composite and the Nasdaq 100. Technology shares saw robust buying activity, with significant advances among server manufacturers, software firms, networking companies and data-center-related names.

Super Micro Computer bolstered the positive sentiment by lifting its forecast, citing heightened demand for AI platforms. In contrast, Netflix declined, underscoring that quarterly results and forward guidance continue to differentiate market performers.

All five major benchmarks recorded gains, yet the underlying breadth was less robust. The Russell 2000 added a mere 0.16%, and advancing stocks in the S&P 500 barely exceeded decliners.

The session's closing levels:

• The Dow Jones Industrial Average rose 361.22 points, or 0.69%, closing at 52,857.10.

• The S&P 500 gained 45.96 points, or 0.60%, to end at 7,758.53.

• The Nasdaq Composite increased 278.04 points, or 1.05%, to 26,702.86.

• The Russell 2000 added 4.51 points, or 0.16%, closing at 2,781.03.

• The Nasdaq 100 climbed 332.24 points, or 1.13%, to 29,822.52.

Technology sector draws in buyers

Super Micro Computer stood out, surging 9.55% to $35.57. Its improved forecast buoyed sentiment around AI infrastructure investments, and Dell Technologies also joined the rally with a 5.27% advance.

The rally went beyond server manufacturers. Networking, cybersecurity and software stocks recorded substantial gains, with several power and infrastructure companies also participating.

Notable gainers included:

• Super Micro Computer advanced 9.55%.

• Strategy climbed 7.54%.

• Bloom Energy gained 7.24%.

• Datadog rose 6.50%.

• Credo Technology increased 6.28%.

• Ciena added 5.66%.

• Dell Technologies advanced 5.27%.

• CrowdStrike climbed 5.26%.

• Palantir gained 4.72%.

• Vertiv rose 4.26%.

• GE Vernova added 4.03%.

These percentage changes were well ahead of the major averages. Investors showed a willingness to deploy capital, especially in firms linked to technology infrastructure.

Netflix and consumer-facing stocks underperform

Netflix dropped 5.31% to $65.05 after investors responded unfavorably to its guidance. The wider technology rally offered scant defense for the streaming company.

Other significant losers were:

• AT&T declined 6.45%.

• Celsius fell 5.51%.

• Whirlpool dropped 5.35%.

• Netflix slid 5.31%.

• Chipotle Mexican Grill lost 5.26%.

• Tencent ADR shed 4.15%.

Breadth data indicates room for further strength

The S&P 500 breadth picture featured 256 winners versus 229 losers. In the Dow, 17 stocks posted gains and 13 notched losses. The Nasdaq 100 saw broader participation, with 62 advancing and 39 declining.

This aligns with the final scores. Technology shares led the way, followed by the Dow and S&P 500, while small-caps lagged. Investors have a positive starting point, though a more widespread advance would strengthen the rally's base.

Post-market earnings reports

• Meta (META) beat estimates on EPS excluding the litigation charge and on revenue. Diluted EPS excluding the charge would have been $7.40 (comprising $3.83 reported plus $3.57), compared with the $6.67 consensus. Reported EPS of $3.83 missed expectations. Revenue of $64.6 billion exceeded the forecast of $63.31 billion.

• IBM (IBM) beat on operating EPS and revenue. Operating EPS of $2.95 surpassed the $2.86 estimate. Revenue of $17.1 billion came in above the $16.81 billion projection. The company reaffirmed its full-year revenue forecast and lifted its full-year free-cash-flow guidance.

• Lam Research (LRCX) topped expectations on adjusted EPS and revenue. Adjusted EPS of $2.20 beat the $2.18 consensus. Revenue of $8.22 billion came in above the $8.13 billion forecast.

• SAP (SAP) beat on revenue and adjusted operating profit. Revenue of €10.3 billion surpassed the €10.1 billion expectation. Adjusted operating profit of €3.0 billion was above the €2.93 billion forecast. The company's full-year adjusted operating profit guidance of €11.8–€12.2 billion exceeded the €11.7 billion consensus.

• CSX (CSX) beat on both EPS and revenue. EPS of $0.57 exceeded the $0.53 estimate. Revenue of $4.02 billion topped the $3.96 billion forecast.

• Tesla (TSLA) beat on adjusted EPS but missed on revenue. Adjusted EPS of $0.48 came in above the $0.45 consensus. Revenue of $28.0 billion was below the $28.1 billion estimate.

• Texas Instruments (TXN) beat on EPS and revenue. EPS of $2.62 surpassed the $2.42 projection. Revenue of $6.06 billion came in above the $5.92 billion forecast. Its next-quarter revenue guidance of $5.8–$6.3 billion was above the $5.75 billion consensus, even at the low end.

Trading takeaway

An advancing index does not guarantee that every stock is gaining. On Wednesday, robust technology increases propelled the major benchmarks, even as several individual stocks dropped over 5%.

For traders, the overall market sets the context, but each stock must still confirm its own trade. Seek price levels that break above resistance and hold, and identify the level that would signal weakening buying momentum.

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See also: US stocks open higher as earnings and AI demand take center stage