Published Tue, Feb 3, 2026 · 05:46 AM
THE S&P 500 closed higher on Monday, lifted by gains in chipmakers and other companies related to artificial intelligence, while smaller companies also rose sharply.
The Russell 2000 index jumped, with the small-cap index significantly outperforming the S&P 500 and Nasdaq so far in 2026.
Alphabet and Amazon each rose ahead of their quarterly reports this week that will give investors an additional glimpse of the race to dominate AI technology.
AI-related data firm Palantir climbed ahead of its quarterly report after the bell.
Chipmakers benefiting from AI-related demand for their components also rallied, including SanDisk, Advanced Micro Devices and Micron Technology.
It was the S&P 500’s first gain in three sessions following recent worries about pricey valuations of technology companies whose shares have soared in recent years on optimism about AI.
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The S&P 500 is up about 2 per cent in 2026, lagging the Russell 2000’s more than 6 per cent rally.
Investors often view gains in small-cap stocks as a reflection of confidence in the economy.
“The fundamentals are good and earnings are strong. We have positive surprises both for revenues and earnings, pretty much across the board,” said Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder in New York.
Analysts expect S&P 500 companies to have grown their earnings nearly 11 per cent in the December quarter, up from an estimate of about 9 per cent at the start of January, according to LSEG.
Technology-related companies are driving most of that growth.
Walt Disney fell despite posting quarterly earnings above Wall Street expectations, as it warned of a decline in international visitors to its US theme parks and a slump in earnings at its TV and film division.
According to preliminary data, the S&P 500 gained 37.25 points, or 0.54 per cent, to end at 6,976.28 points, while the Nasdaq Composite gained 129.69 points, or 0.55 per cent, to 23,591.51. The Dow Jones Industrial Average rose 519.80 points, or 1.06 per cent, to 49,412.27.
US factory activity grew for the first time in a year in January, PMI data showed.
The CBOE VIX, a volatility index also known as Wall Street’s “fear gauge,” dropped 1.3 points to 16.2 after touching a near two-week high earlier in the session.
The S&P 500 energy sector index dropped as oil prices slid. US President Donald Trump said Iran was “seriously talking” with Washington, comments that hinted at de-escalation and eased fears of supply disruptions.
Lower energy prices boosted airline shares. United Airlines, JetBlue, Delta Air Lines and Southwest all rallied.
The House of Representatives took up legislation to lift a partial government shutdown entered on Saturday, with a final vote expected on Tuesday.
The Bureau of Labor Statistics said the closely watched employment report for January would not be released on Friday due to the partial shutdown. REUTERS
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