Nasdaq climbs as chip and AI-linked stocks bounce back
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A trader works on the floor of the New York Stock Exchange (NYSE) at the opening bell in New York City, Monday. Tech shares were on the upswing early October 19 as investors opened the week by taking advantage of last week’s pullback in the Nasdaq. Last weeks 4.5 percent drop was due to various worries surrounding the artificial intelligence buildout, including over the impact of higher interest rates on debt taken out to finance the boom. AFP-Yonhap
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 Nasdaq had posted their biggest weekly drop since late June on Friday, as concerns that higher interest rates could curb investments in AI infrastructure weighed on technology stocks, particularly data center operators.
The selloff reflected mounting investor unease over how the costly AI build-out will be financed, a question that has increasingly pressured companies underpinning the U.S. bull market, which recently marked its fourth anniversary.
The Philadelphia Semiconductor Index was last up about 2 percent, putting it on course to snap an eight-day losing streak in which it fell about 15.7 percent 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.”
This week, Meta, down almost 1 percent on Monday, is due to report results on Wednesday. Results from Elon Musk-led Tesla are also due that day, while SpaceX is scheduled to report on Tuesday.
At 2:08 p.m. the Dow Jones Industrial Average rose 13.01 points, or 0.03 percent, to 52,015.42, the S&P 500 gained 40.86 points, or 0.53 percent, to 7,700.54 and the Nasdaq Composite gained 307.83 points, or 1.18 percent, to 26,447.86.
Of the S&P 500’s 11 major sectors, seven were declining. However, consumer discretionary and technology led the gainers, up 2.7 percent and 1.4 percent, respectively.
Boosts to the consumer sector came from companies including Amazon.com, which was up 4.8 percent after Morgan Stanley named the e-commerce and cloud computing firm as its “top pick.” Tesla was another boost to that sector with a 3.7 percent gain.
CoreWeave was at the center of last week’s selloff after its shares plunged more than 25 percent on worries over a $50 billion debt load. Shares in the cloud computing provider were last down more than 1.5 percent on Monday as it gave back earlier gains resulting from Goldman Sachs’ upgrade of the stock to “buy” from “neutral.”
Peers Nebius and Iren were still up 1.5 percent and 2.9 percent, respectively, in afternoon trading.
U.S. crude oil reversed earlier losses and was last rallying about 2.3 percent at nearly $104 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.
Intel shares rose close to 3 percent after J.P. Morgan upgraded the stock to “neutral” from “underweight.”
Cleveland-Cliffs surged about 16 percent 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.
