New York stocks rebounded on the 8th local time after shaking off last week's plunge in chip stocks. As investor optimism about artificial intelligence technology resurfaced, semiconductor-related shares led the market higher.
On the 8th at the New York Stock Exchange, the tech-heavy Nasdaq composite rose 220.23 points, or 0.86%, to finish at 25,929.66. The large-cap Standard & Poor's (S&P) 500 closed up 21.99 points, or 0.30%, at 7,405.73. In contrast, the blue chip–focused Dow Jones industrial average slipped 80.77 points, or 0.16%, to 50,786.01, posting a slightly weaker tone.
The Philadelphia semiconductor index, which shows the price trend of major chip corporations, jumped 685.93 points, or 5.61%, to end the session at 12,906.69. Although the Nasdaq plunged more than 4% and the semiconductor index tumbled nearly 10% on Friday after a stronger-than-expected May jobs report, investor sentiment recovered quickly over the weekend. It is seen as the result of a surge in so-called bargain hunting, in which investors buy shares when prices fall.
Intel particularly drew market attention as its shares spiked 11%. A report saying Google will rely on Intel for more than 3 million AI-specialized chips through 2028 sharply boosted investor expectations. Micron Technology jumped nearly 10%, and Broadcom rose 2.8%. Nvidia, known as the bellwether of artificial intelligence, also climbed 1.7%.
By contrast, the broader large-cap tech trade outside semiconductors was somewhat sluggish. Apple fell 1.9%. Apple held its annual developer conference that day and unveiled a new version of its voice assistant Siri with AI built in. It was a gambit to overturn the view that it had fallen behind in the AI race, but investor reaction was lukewarm. Microsoft and Google parent Alphabet each fell more than 1%, and Meta and Amazon also could not avoid declines. Experts said this means warmth did not spread across the market and money instead piled into specific names such as semiconductors. In fact, more than 320 corporations within the S&P 500 fell that day.
Geopolitical jitters that had intensified over the weekend eased somewhat. As armed clashes between Iran and Israel escalated, stock index futures transaction on Sunday at one point turned lower. International oil prices also surged early in the session. But as Iran said it had ended its attack on Israel and tensions on both sides threatening peace talks eased, the stock market regained stability. West Texas Intermediate crude settled up 0.82% at $91.28 a barrel. Shares of major energy corporations such as Exxon Mobil and Chevron rose more than 1% on the back of higher oil. When oil prices rise, energy corporations that extract and sell crude see profitability improve.
Experts interpreted the rebound as a positive sign for the continuation of the bull market. Morgan Stanley analyst Mike Wilson assessed last week's decline as a healthy reset. With corporate earnings and economic indicators providing solid support, he maintained his existing outlook that the S&P 500 will reach the 8,000 level by year-end. Citigroup analyst Scott Chronert also said expectations for corporations' profits have grown and raised his S&P 500 year-end target to 8,100 from 7,700.
UBS analyst Mark Haefele at Switzerland's largest bank emphasized that investors will not lose confidence in the AI outlook. He noted that while tech stocks have recently faced pressure over whether they meet expectations, corporations' fundamentals remain strong.
Stock investors are focusing on the May consumer price index due on the 10th. The securities industry expects prices to rise 4.2% from a year earlier, hitting a record high in three years. If inflation stays elevated, the Federal Reserve, the Central Bank, is more likely to keep interest rates high to tighten the money supply. Higher rates make it harder for corporations to borrow and invest, which is a headwind for the stock market.
Jimmy Lee, CEO of asset manager Wells Consulting Group, projected that the inflation gauge will play a decisive role in calming investor jitters about future rate hikes. With the Federal Reserve's monetary policy decision meeting set for the 17th next week, the importance of this inflation print has grown.
Among individual names, Marvell Technology, a communications network chip maker, surged nearly 10%. News that it will be newly added to the S&P 500 on the 22nd served as a catalyst. Typically, when a stock is included in a major index like the S&P 500, large funds that track the index mechanically flow in, pushing the share price higher.
Shares of cryptocurrency financial services corporation Galaxy Digital also skyrocketed 21% on news it will enter the AI data center business. By contrast, Denmark-based drugmaker Zealand Pharma plunged 22%. News that participants dropped out en masse from clinical trials after a developing obesity treatment caused severe gastrointestinal side effects was a major drag.