Nasdaq rebounds as chip and AI stocks bounce back from selloff
Wall Street's Nasdaq led gains on Monday as chip and AI-related stocks recovered from last week's steep selloff, though investors remained cautious ahead of major tech earnings. The S&P 500 rose 0.42 per cent while the Dow slipped, as oil prices climbed on Middle East attacks.
The tech-heavy Nasdaq Composite led Wall Street gains on Monday as investors returned to chip and AI-related stocks following last week's bruising selloff, while awaiting key corporate earnings reports.
The benchmark S&P 500 and the Nasdaq had marked their biggest weekly declines since late June on Friday, as concerns that higher interest rates could curb investments in AI infrastructure weighed on technology stocks, particularly chip companies and data center operators. The selloff reflected mounting investor unease over how costly AI developments will be financed, a question that has increasingly pressured companies underpinning the US bull market, which recently marked its fourth anniversary.
The Philadelphia Semiconductor Index snapped an eight-day losing streak in which it fell about 15.7 per cent for its longest run of declines since October 2008.
"Rubber bands can only stretch so far in one direction before they snap and start reversing, and you finally saw that enough-is-enough moment in the semiconductors after Friday's close," said Michael James, managing director and equity sales trader at Rosenblatt Securities in Los Angeles. "Nothing changed between Friday's close and this morning's open, other than nothing bad happened over the weekend, and sentiment had gotten so negative that we were oversold to the point where a bounce was due," James said.
With many technology company earnings reports due in coming days and weeks, he cautioned that the market is "far from out of the woods." Social media company Meta is due to report results on Wednesday along with electric vehicle company Tesla, while SpaceX is scheduled to report on Tuesday.
According to preliminary data, the S&P 500 gained 32.48 points, or 0.42 per cent, to end at 7,691.07 points, while the Nasdaq Composite gained 290.85 points, or 1.11 per cent, to 26,430.89. The Dow Jones Industrial Average fell 32.21 points, or 0.06 per cent, to 51,970.20.
Energy markets removed some earlier support for equities as oil price fluctuations tend to impact inflation. US crude oil futures reversed earlier losses to settle up 2.2 per cent at US$103.66 a barrel after attacks by Yemen's Iran-aligned Houthis on a Yemeni military training camp and renewed attacks on Saudi energy, airport and military facilities.
During the session, consumer discretionary and technology were leading the gainers among the S&P 500's 11 major sectors. The defensive utilities and real estate sectors were among the laggards. Boosts to the consumer sector came from companies including Amazon.com after Morgan Stanley named the e-commerce and cloud computing firm its "top pick," with Tesla providing another boost.
CoreWeave was at the center of last week's selloff after its shares plunged more than 25 per cent on worries over a US$50 billion debt load. Trading in the cloud computing provider gave up early gains that appeared to be in response to Goldman Sachs' upgrade of the stock to "buy" from "neutral." Peers Nebius and Iren outperformed. Intel shares climbed after J.P. Morgan upgraded the stock to "neutral" from "underweight." Cleveland-Cliffs shares surged after the steelmaker surpassed analysts' estimates for third-quarter profit.
Monday marked the 39th anniversary of Black Monday, the 1987 crash that was the biggest one-day decline in the history of the Dow Jones Industrial Average.