US stocks climbed higher on Tuesday, staging a recovery from steep losses as software stocks led the charge. The rally was fueled by renewed optimism around artificial intelligence, helping Wall Street shake off recent fears that rapid AI advances could disrupt large parts of the economy.
The Dow Jones Industrial Average led the gains, rising roughly 0.9%, while the S&P 500 picked up about 0.8%. The tech-heavy Nasdaq Composite gained approximately 1%. A major chipmaker saw its stock surge as much as 10% after announcing a significant deal to supply graphics processing units for the AI infrastructure build-out of a leading social media company.
This rebound followed a sharp sell-off on Monday, driven by investor anxiety over the potential for AI to reshape entire industries. The focus shifted Tuesday to a prominent AI developer’s virtual event, where it unveiled updates to its AI tools and chatbot for business use. The company also announced new partnerships with several software firms, including providers of customer relationship management, financial data, and digital agreement services, sparking rallies in their respective stocks.
Meanwhile, concerns about a revived trade war continued to keep markets on edge. A new 10% global tariff took effect, throwing existing trade deals into doubt and drawing protests from major trading partners who argued the duties put them at a disadvantage. Investors were anticipated to listen closely to a key presidential address later in the day for further clues on trade policy and the administration’s economic outlook.
In other market news, a budget airline reached an agreement with its creditors, setting it on a path to exit bankruptcy proceedings later in the year. The deal is expected to provide the financial support needed for the carrier to complete its restructuring.
Separately, a report from a major financial institution warned that AI-fueled layoffs could potentially raise the unemployment rate this year. And while a key measure of consumer confidence ticked up slightly in February, an economist noted the overall trend remains “pretty disturbing,” with consumers continuing to find jobs hard to get and maintaining a pessimistic view of the current economic environment.
