US STOCKS-Nasdaq leads Wall Street to higher close as SpaceX, Super Micro boost AI sentiment

By Sinéad Carew and Purvi Agarwal

Oct 21 (Reuters) - The tech-heavy Nasdaq led Wall Street to a higher close on Wednesday after quarterly results from SpaceX and Super Micro Computer improved investor appetite for artificial intelligence-related stocks, weakness in communications services stocks capped gains.

SpaceX shares SPCX.O rallied after Elon Musk's rocket and space technology firm posted its first profit as a public company. Musk said a merger of SpaceX and Tesla TSLA.O would be "a good idea," also boosting Tesla shares.

Also on the earnings front, Super Micro SMCI.O shares jumped and it was among the S&P 500's top gainers after the AI server maker forecast quarterly revenue and profit margin above Wall Street estimates, signaling that AI demand remained resilient. The report boosted peers HPE HPE.N and Dell DELL.N.

The reports appeared to provide some reassurance to investors who have been worried about the sustainability of massive spending on AI buildouts and their profitability. The technology sector was hammered last week by a selloff in AI-linked stocks, with data center operator CoreWeave CRWV.O at the center of the storm.

The SpaceX news "pushes back on some of the investor worries" about AI along with some help from SMCI, according to Angelo Kourkafas, senior global strategist at Edward Jones.

Kourkafas said the reports will not "answer all the questions investors have on returns on AI investments, but it's a good start."

After the reports, the S&P 500 Information Technology index .SPLRCT was the biggest gainer among the S&P 500's 11 major industry sectors.

"It's really a positive technology story for almost anyone that is somewhat involved in the artificial intelligence ecosystem," said Marc Dizard, chief investment officer at Huntington Bank.

"The technology market reaction has been a reaffirmation that the artificial intelligence trade is still intact," he added.

However, Dizard said sentiment can quickly shift around AI, and that investors will seek reaffirmation when they monitor earnings reports from companies such as Meta META.O, due out after the market close when Tesla is also scheduled to report results.

According to preliminary data, the S&P 500 .SPX gained 44.64 points, or 0.58%, to end at 7,757.74 points, while the Nasdaq Composite .IXIC gained 276.80 points, or 1.05%, to 26,701.61. The Dow Jones Industrial Average .DJI rose 355.90 points, or 0.68%, to 52,851.78.

Within technology, one of the strongest areas was chips with a rally in the Philadelphia SE Semiconductor index .SOX, which has had a volatile month so far including an eight-session selloff.

The overall rise on the S&P 500 was contained by a drop in communication services stocks .SPLRCL. Its biggest losers included telecom operators such as AT&T T.N even as it beat third-quarter revenue and profit expectations. The SpaceX results, along with a recent wireless spectrum purchase, fanned fears that it will become a more formidable competitor to AT&T, according to Dizard.

Also in communications services, Netflix NFLX.O shares sank after the video streaming company issued a weaker-than-expected forecast for its fourth-quarter profit. Google's parent Alphabet GOOGL.O also declined.

Abbott Laboratories ABT.N shares dropped after the medical device maker cut its 2026 sales growth forecast.