Big tech earnings, Fed rate decision loom over advancing U.S. stocks.

NEW YORK, July 25 (Xinhua) — U.S. stocks extended gains on Tuesday as investors waited for big tech earnings after the bell and the Federal Reserve’s policy decision on Wednesday.

The Dow Jones Industrial Average rose 26.83 points, or 0.08 percent, to 35,438.07. The S&P 500 added 12.82 points, or 0.28 percent, to 4,567.46. The Nasdaq Composite Index increased 85.69 points, or 0.61 percent, to 14,144.56.

Six of the 11 primary S&P 500 sectors ended in red, with real estate and financials leading the laggards by losing 0.74 percent and 0.73 percent, respectively. Meanwhile, materials and technology led the gainers by rising 1.76 percent and 1.19 percent, respectively.

U.S. stocks ended higher on Tuesday, with investors digesting mixed earnings results from big name companies like General Motors and General Electric. Meanwhile, investors were waiting for results from tech giants like Microsoft and Google parent Alphabet due after the market close to gauge whether all the enthusiasm around artificial intelligence (AI) will justify recent market rally.

“Investors will be wanting to hear from Alphabet and Microsoft about their cloud businesses, the ongoing impact and use of AI and their general outlooks for American and global markets,” said David Sekera, chief U.S. market strategist at Morningstar, in an interview with MarketWatch.

Of the 130 S&P 500 companies that have reported second-quarter earnings thus far, about 79 percent have exceeded analysts’ expectations, according to FactSet data.

Nearly 170 companies in the S&P 500 are due to report this week, with investors counting on earnings to make decisions on where to go. That’s especially true for AI-related stocks.

“Year-to-date, the combined global tech market cap has climbed by 6 trillion U.S. dollars, of which we estimate AI-related stocks have contributed roughly 2 trillion dollars. We don’t think AI is a bubble given clear use cases and solid long-term visibility, but recommend investors consider companies with clear monetization trends,” according to an analysis published by UBS Global Wealth Management on Tuesday.

The Federal Reserve kicked off its two-day policy meeting on Tuesday, with traders overwhelmingly betting that the Fed will raise rates by a quarter percentage point on Wednesday.

Many analysts believe that the widely expected hike might prove to be the last in the Fed’s tightening cycle, as price pressures continue to ease recently.

While falling inflation supports the expectations for a Fed pivot on monetary policy, it also poses a risk to nominal revenue growth and earnings, said Mike Wilson, Chief Investment Officer and Chief U.S. Equity Strategist at Morgan Stanley.