Wall Street ends mixed as strong earnings offset AI profitability fears

Wall Street closed mostly higher Tuesday (local time) as upbeat corporate earnings and a pullback in crude oil prices lifted sentiment.

The Dow Jones Industrial Average rose 529.85 points, or 1.02 percent, to finish at 52,495.88.

The S&P 500 gained 21.84 points, or 0.28 percent, to close at 7,712.57. The tech-heavy Nasdaq Composite edged down 6.07 points, or 0.02 percent, to 26,424.82.

Markets opened weaker, weighed down by rising oil prices and dampened investor appetite for AI-related stocks, before rebounding as the prospect of diplomatic mediation between the United States and Iran came into focus.

Iranian President Masoud Pezeshkian met Pakistani army chief Gen. Asim Munir in Tehran to discuss mediation efforts and regional tensions, according to Iran's Nour News.

Middle Eastern media also reported that Qatar and Pakistan had presented new peace proposals to both Washington and Tehran, though the specifics of the proposals and whether either side had accepted them could not be confirmed.

Brent crude, which had approached $112 a barrel during intraday trading amid Middle East tensions, fell back below $109, providing an additional lift to equities.

A string of companies reported quarterly results that beat market expectations.

Credit reporting firm Equifax surged 11.3 percent after posting quarterly net profit above forecasts, while toymaker Hasbro climbed 11.2 percent on solid earnings.

Industrial manufacturer 3M rose more than 5 percent after beating earnings estimates and raising its full-year profit outlook.

Large-cap technology stocks weighed on the Nasdaq, however, with Apple falling 1.00 percent and Meta dropping 1.59 percent.

Concerns about the cost of funding massive AI investments and doubts over near-term profitability continued to drag on the sector.

Nvidia fell 0.29 percent, Micron declined 0.98 percent, and SK hynix's American depositary receipts dropped 2.16 percent. The Philadelphia Semiconductor Index also slipped 0.29 percent.

Foreign media reported that Korean AI company Elice, which plunged more than 30 percent on its first day of trading on the Korean stock market, dampened sentiment toward US tech stocks early in the session.

Bloomberg said Elice, which had been "largely unknown outside the Korean market," had been thrust into the center of "a fierce debate over AI valuations and whether companies can live up to them."

Elice closed at 61,500 won ($46) on the Kosdaq, down 32.04 percent from its initial public offering price of 90,500 won.

Hebe Chen, a senior market analyst at Vantage Global, said Elice's "disastrous debut" confirmed that the era of "buying anything AI" had given way to one of "questioning anything AI."

Elice's poor market debut further weighed on AI-related stocks on Wall Street during the session, Reuters reported.

After the closing bell, SpaceX reported a return to profit in the third quarter. Revenue jumped 161 percent year-on-year to $14.58 billion, while operating profit came in at $2.79 billion and net profit for the period reached $4.4 billion — a sharp swing to profit compared with both the same period last year and the previous quarter.

SpaceX shares closed down 0.11 percent at $147.79 in regular trading, but the stock was up more than 7 percent in after-hours trade as of 6:48 p.m. Eastern time following the earnings release.