Wall St rises as tech stocks recoup some losses

By Shashwat Chauhan and Twesha Dikshit

Feb 18 (Reuters) – The main U.S. indexes advanced on Wednesday as technology shares recovered some lost ground after an AI-led selloff, while investors awaited minutes from the Federal Reserve’s most recent policy meeting later in the day.

Worries that rapidly improving artificial-intelligence tools could disrupt business models rocked U.S. stocks this month, leading to declines in sectors from software to trucking.

The S&P 500 software and services sector, which saw heavy selling earlier this month, rose 1.4%, boosted by a 9.5% advance in Cadence Design Systems after the chip-design software provider beat fourth-quarter revenue estimates.

Some concerns remained as cybersecurity company Palo Alto Networks dropped 6.3% after trimming its annual profit forecast.

Broader AI-linked and megacap technology stocks had lost ground earlier this month as investors demanded stronger evidence the heavy investments in the technology were tangibly boosting revenue and profits.

Most megacap and growth stocks rose on the day, with Nvidia gaining 2.6% after the company said it had signed a multi-year deal to sell Meta Platforms millions of its current and future AI chips.

Other megacaps also rose. Amazon.com was up 2.3%, while Alphabet and Microsoft gained about 1% each.

“Figuring out the winners and losers in AI is likely to be a center theme in 2026. While AI is very promising, investors should not assume that all companies will win on the AI front,” said Paul Stanley, chief investment officer at Granite Bay Wealth Management.

Seven of the 11 S&P sub-sectors were on the rise, with information technology and consumer discretionary leading gains.

Real estate and utilities were laggards, each losing more than 1%.

At 11:25 a.m. ET, the Dow Jones Industrial Average rose 280.48 points, or 0.56%, to 49,813.67, the S&P 500 gained 58.89 points, or 0.86%, to 6,902.11, and the Nasdaq Composite was up 294.79 points, or 1.31%, to 22,873.17.

Minutes from the Fed’s January policy meeting, where it held its main lending rate steady, are expected at 2 pm ET and could offer more clues on the future path of interest rates.

Traders are pricing in a roughly 63% chance of a rate cut of at least 25 basis points at the Fed’s June meeting, the first with odds above 50%, according to CME’s FedWatch Tool.

Meanwhile, data released on Wednesday showed solid business spending and U.S. economic growth in the fourth quarter. The personal consumption expenditure report – the Fed’s preferred inflation gauge – will also be in focus later this week.

In earnings-driven moves, Analog Devices rose 3.4% after the chipmaker forecast second-quarter results above Wall Street estimates. Global Payments jumped 14.1% after the company projected annual adjusted profit above expectations.

Moderna climbed 5.8% after the U.S. Food and Drug Administration agreed to review its influenza vaccine, reversing an earlier decision rejecting the application.

Advancing issues outnumbered decliners by a 2.37-to-1 ratio on the NYSE and by a 2.25-to-1 ratio on the Nasdaq.

The S&P 500 posted 16 new 52-week highs and three new lows, while the Nasdaq Composite recorded 77 new highs and 74 new lows.

(Reporting by Shashwat Chauhan and Twesha Dikshit in Bengaluru; Editing by Pooja Desai and Saumyadeb Chakrabarty)