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US equities advanced on Wednesday, led by gains in artificial intelligence and semiconductor stocks, as investors digested upbeat economic data and reacted to the Supreme Court’s apparent skepticism toward President Donald Trump’s tariff policies.

The renewed optimism helped major indexes recover from the previous session’s sell-off, driven by valuation concerns in the AI sector.

Major indices advance as AI sector regains strength

The Dow Jones Industrial Average climbed 276 points, or 0.59%, while the S&P 500 gained 0.77%.

The tech-heavy Nasdaq Composite outperformed, rising 1.1%, as major chipmakers and AI-linked names rebounded.

Advanced Micro Devices (AMD) helped lead the recovery after initially opening lower.

The chipmaker reported third-quarter earnings and revenue that exceeded analyst expectations, easing early concerns about its margin outlook.

Shares of AMD were last up around 3%, sparking a broader rally across semiconductor and AI-related stocks.

Broadcom AVGO and Micron Technology MU surged nearly 2% and 8%, respectively, reversing Tuesday’s losses.

Industry leaders Nvidia NVDA and Oracle ORCL also recovered, adding to the rebound in the high-growth technology segment.

The recovery came after Tuesday’s sharp pullback in several AI-focused stocks.

Palantir Technologies PLTR, which had dropped about 8% on valuation concerns, extended its decline by another 1.5% on Wednesday.

Super Micro Devices SMCI fell 9% following weaker-than-expected fiscal first-quarter results, and Arista Networks ANET slid 7% after its quarterly earnings disappointed investors.

Supreme Court tariff hearing adds market optimism

Investor sentiment was also lifted by developments in Washington, where the US Supreme Court heard oral arguments on the legality of Trump’s emergency tariffs.

The justices, both conservative and liberal, appeared skeptical of the administration’s justification under the International Emergency Economic Powers Act (IEEPA), questioning whether the president had the authority to unilaterally impose sweeping global tariffs.

Prediction markets responded swiftly, reducing the implied odds that the Court would uphold the tariffs.

That shift helped boost shares of companies sensitive to trade policy.

Detroit automakers Ford F and General Motors GM each rose around 3%, while Caterpillar CAT gained 4%.

Small-cap stocks, which are generally more exposed to domestic economic conditions and trade policies, outperformed.

The Russell 2000 rose 1.5%, outpacing the S&P 500’s 0.77% advance.

Economic data and corporate earnings drive broader market moves

Wednesday’s session also brought encouraging signs from the US economy.

The ADP employment report and ISM services index both came in stronger than expected, signaling resilience in hiring and business activity.

However, the robust data contributed to a rise in Treasury yields, tempering some optimism among investors who are expecting a third Federal Reserve rate cut in December.

On the corporate front, several individual stocks made notable moves following earnings announcements.

Unity Software U surged 14% after reporting better-than-expected third-quarter results and issuing upbeat revenue guidance for the fourth quarter.

Allegiant Travel ALGT jumped 21% after raising its full-year earnings outlook, projecting 2025 profits above $3 per share — up from prior guidance of $2.25.

Conversely, Perrigo PRGO shares plunged 22% after the pharmaceutical firm posted mixed third-quarter results and cut its full-year earnings outlook.

Electric vehicle maker Rivian RIVN rallied 23% following a strong quarterly performance and confirmation that its upcoming R2 model remains on schedule for launch in the first half of 2026.

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