The tech-heavy Nasdaq Composite Index opened lower, but turned around and closed up 0.7 percent. The broader S&P climbed 0.9 percent, while the Dow Jones Industrial Average rose 1.4 percent.
The trading day began with Nvidia falling about 6 percent after reports that Meta was considering using Google's AI chip. But Nvidia recovered and eventually closed down 2.6 percent. Alphabet, in turn, picked up on the news, climbing 1.6 percent, while Meta rose 3.8 percent.
In addition to the risks of an AI bubble, investors are also weighing the prospects for continued interest rate cuts from the US Federal Reserve.
Expectations for such a move received a slight boost on Tuesday, when White House national economic advisor Kevin Hassett was reportedly the favorite among Trump's advisers to take over as the next Fed chief, according to Bloomberg's sources.
Current Federal Reserve Governor Jerome Powell's term ends in May 2026.
Concerns about the labor market are also contributing to lower American consumers' economic confidence. The November reading for The Conference Board's survey, which describes the mood among American consumers, is the lowest since April, CNBC reports.
