US stocks rally as oil drop eases inflation fears; Nvidia slumps on CEO probe
US stocks rallied on Monday as falling oil prices eased inflation concerns, with the S&P 500 posting its biggest daily gain since April. AI heavyweight Nvidia fell 6% amid an internal investigation into CEO Jensen Huang, but most tech shares surged.
US stocks rallied on Monday, with the S&P 500 bouncing back from its biggest weekly drop since April 2025, as a sharp decline in oil prices tempered inflation fears. All 11 major S&P 500 sector indexes rose, led by industrials and consumer discretionary stocks, each gaining more than 3 per cent.
The Dow Jones Industrial Average rose 1,131.81 points, or 2.21 per cent, to 52,417.54. The S&P 500 gained 177.81 points, or 2.41 per cent, to 7,554.67, on track for its biggest daily percentage gain since 8 April. The Nasdaq Composite added 656.06 points, or 2.67 per cent, to 25,235.49, its best day since 30 July.
Nvidia, the world's second most valuable company, tumbled about 6 per cent to its lowest intraday level since 31 March. The decline came amid questions about CEO Jensen Huang's future at the AI chipmaker after an internal investigation into whether a foreign intelligence effort had targeted him.
“The AI story is not going away,” said Ken Polcari, partner and chief market strategist at SlateStone Wealth in Jupiter, Florida. “If people are worried about that, the Democrats are not going to destroy AI. They can't. It's got a life of its own. They can put regulation around it, but they're certainly not stopping it.”
Providing further support was a drop in crude oil prices, helping dampen concerns about price pressures as US President Donald Trump downplayed the likelihood of renewed strikes on Iran. “Oil prices for sure, if they're down 4%, that's certainly adding fuel to the fire,” Polcari said.
Last week's slump followed a sweeping victory by Democrats in the US midterm elections, which fed concerns that new regulations could dent the durability of the AI trade. Some analysts viewed that decline as an overreaction. Morgan Stanley and UBS said the rout in AI stocks was overdone, and the risks of extreme regulation of data centre developments under a Democratic-controlled Congress were unlikely to play out.
The Philadelphia Semiconductor Index rose more than 6 per cent after plunging more than 12 per cent last week. Nvidia was the sole decliner in the index, while Broadcom gained nearly 9 per cent and Advanced Micro Devices surged about 13 per cent. Inflation readings are due this week, with the Labor Department releasing its Consumer Price Index report for October on Tuesday and Producer Price Index on Friday.