US Stocks Rebound as AI Earnings Approach and France Unrest Grows

Wall Street technology shares recovered on Monday, October 19, as investors prepared for a series of major artificial intelligence earnings reports, while European markets and the euro weakened amid unrest in France and renewed concerns about the country's public finances. The Nasdaq Composite climbed 1.11% as investors assessed whether substantial AI investments would generate sufficient returns.

The Nasdaq gained 290.85 points to close at 26,430.89, while the S&P 500 advanced 31.29 points, or 0.41%, to 7,690.73. The Dow Jones Industrial Average slipped 36.38 points, or 0.07%, to 51,966.03, according to market data cited by Reuters.

A semiconductor index rose 1.6%, recovering some losses after declining for eight consecutive sessions through Friday. Reuters reported that the streak was the index's longest since 2008. The global MSCI stock gauge edged up 0.08% to 1,129.98.

Peter Cardillo, chief market economist at Spartan Capital Securities in New York, said investors were taking advantage of recent market declines.

"Investors are buying the correction dip that we had," said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.

Cardillo said the upcoming corporate reporting period would provide a significant test for financial markets, particularly as investors evaluate spending on artificial intelligence.

"The market is now going to go through a very critical test over the next two weeks. We have some big-name earnings coming out," he said. "In terms of technology, the test of whether or not the spending on AI... will be met with satisfaction is going to be critical."

Meta was scheduled to report results on Wednesday, while Tesla, Lam Research and Texas Instruments were also expected to release earnings during the week. SpaceX results were due Tuesday, according to Reuters.

Goldman Sachs estimated that Meta and four other major AI infrastructure companies would collectively increase capital expenditures to approximately $1.2 trillion next year. Overall, US corporate earnings were still expected to grow about 30%, with technology companies accounting for much of the anticipated expansion.

US Treasury yields rose as concerns about the effects of higher interest rates on AI-related stocks eased. The benchmark 10-year Treasury yield increased 4.2 basis points to 5.14%, recovering after its largest weekly decline in seven months. The recent bond selloff had also intensified scrutiny of the funding required to sustain large-scale AI investments.

In Europe, French government bonds and Paris-listed shares declined as widespread protests highlighted the challenges facing the government in reducing its substantial budget deficit. The euro also fell amid growing concerns about France's fiscal outlook.

France's central government asked some local authorities to impose curfews on Monday as officials faced pressure over security failures following looting associated with the protests. The unrest added to uncertainty surrounding the country's finances and political environment.

Separate US economic data indicated further weakness in the housing sector. The National Association of Home Builders and Wells Fargo Housing Market Index fell three points to 29 in October, its lowest reading since June 2012. The result also came in below the Reuters-polled economists' estimate of 31.