By Krystal Hur and Chelsey Dulaney

Tech stocks led markets higher on Wednesday, lifted by strong earnings and dip-buying in artificial-intelligence shares.

The Nasdaq composite rose 0.6%, recovering some ground after doubts about the AI trade sent the tech-heavy index to its worst day in weeks.

Exuberance about AI has helped power the recent run to records, but intermittent setbacks have left investors questioning whether lofty valuations and massive outlays are justified. In recent days, investors have been unsettled by outsize spending plans laid out by companies such as Meta Platforms.

"It's right that when you see the scale, the monstrosity of these numbers, to have a healthy dose of skepticism," said Seema Shah, chief global strategist at Principal Asset Management. "But as long as these companies continue to deliver, then the market should continue to be OK."

The S&P 500 gained 0.4%, while the Dow Jones Industrial Average added 0.5%, or around 226 points.

Chip makers rebounded, with Advanced Micro Devices shares rising 2.3% after the chip designer reported soaring sales and profit. Broadcom climbed 2% and Qualcomm gained 4%.

Bitcoin rose 3%. On Tuesday, the cryptocurrency had its worst day since the April 3 "Liberation Day" market rout, briefly sinking below $100,000. Wall Street's fear index, the VIX index of equity volatility, retreated.

Trade-sensitive stocks gained ground after Supreme Court justices appeared skeptical of President Trump's tariffs. Trade restrictions have dragged on markets since April's turmoil. General Motors gained 2.9%. Stellantis rose 1.9%. American Eagle Outfitters added 4.9% and Williams-Sonoma climbed 2.6%.

The Dow was boosted by a jump in Amgen, which gained 7.8% after the biotechnology company raised its outlook for the year in quarterly results reported Tuesday afternoon. Shares of Caterpillar, another blue-chip stock, rose 3.9% after the equipment maker laid out aggressive long-term growth targets at its Investor Day Tuesday.

Shares of some tech giants continued to slide Wednesday. Palantir Technologies shares lost 1.5%, adding to their losses after touching an all-time high earlier in the week. Microsoft's stock declined 1.4% and Nvidia fell 1.8%.

Sarah Henry, managing director at Logan Capital Management, says that she recommends investors pick up shares of restaurants, consumer staples and others that look cheap compared with the stretched valuations in hot AI stocks.

"Volatility is here to stay," said Henry. "It's going to be a ping pong match between these AI names and the global real-economy names."

Treasury yields, which rise when bond prices fall, climbed Wednesday after the Treasury Department said in its quarterly borrowing announcement that it was considering increases to debt-auction sizes beyond short-term T-bills--although not anytime soon. That message surprised some investors, who have been betting that the administration would lean as much as possible on T-bills to meet growing borrowing needs.

An increase in expected bond issuance tends to push up Treasury yields, with investors demanding higher returns to buy additional debt. The yield on the 10-year note climbed to 4.156%, according to Tradeweb, from 4.090% on Tuesday.

Yields also got a boost from some better-than-expected data on private employment and service-sector activity, which led traders to slightly scale back their bets that the Federal Reserve will cut interest rates next month.

Overseas, the tech selloff weighed on South Korea's Kospi, which fell nearly 3%, and Japan's Nikkei 225, which lost 2.5%, as the technology and telecoms conglomerate SoftBank Group fell 10%.

Write to Krystal Hur at krystal.hur@wsj.com and Chelsey Dulaney at chelsey.dulaney@wsj.com

(END) Dow Jones Newswires

November 05, 2025 16:33 ET (21:33 GMT)

Copyright (c) 2025 Dow Jones & Company, Inc.