The tech-heavy Nasdaq Composite led Wall Street gains on Monday as investors returned to the chip sector and other AI-related stocks following last week's bruising selloff, while investors waited for 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 .SOXsnapped an eight-day losing streak in which it fell about 15.7% 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.
And with a lot of technology company earnings reports due out in coming days and weeks, he cautioned that the market is "far from out of the woods."
Social media company MetaMETA.O is due to report results on Wednesday along with electric vehicle company Tesla TSLA.O, while SpaceX SPCX.O is scheduled to report on Tuesday.
According to preliminary data, the S&P 500 .SPX gained 32.48 points, or 0.42%, to end at 7,691.07 points, while the Nasdaq Composite .IXIC gained 290.85 points, or 1.11%, to 26,430.89. The Dow Jones Industrial Average .DJI fell 32.21 points, or 0.06%, 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% at $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. O/R
During the session, consumer discretionary .SPLRCD and technology .SPLRCT were leading the gainers among the S&P 500's 11 major sectors. The defensive utilities .SPLRCU and real estate .SPLRCR sectors were among the laggards.
Boosts to the consumer sector came from companies including Amazon.com AMZN.O after Morgan Stanley named the e-commerce and cloud computing firm its "top pick." Tesla provided another boost.
CoreWeave CRWV.O was at the center of last week's selloff after its shares plunged more than 25% on worries over a $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 NBIS.O and Iren IREN.O outperformed.
Intel INTC.O shares climbed after J.P. Morgan upgraded the stock to "neutral" from "underweight."
Cleveland-Cliffs CLF.N shares surged after the steelmaker surpassed analysts' estimates for third-quarter profit.
Monday is the 39th anniversary of Black Monday, the 1987 crash that marked the biggest one-day decline in the history of the Dow Jones Industrial Average.
Reuters
