On Monday, falling oil prices and a rebound in technology stocks following last week's volatility drove US equities higher. The Dow closed up 1,104.02 points, or 2.15%, at 52,389.75, supported by gains in stocks such as Goldman Sachs and Caterpillar. The Nasdaq closed up 673.71 points, or 2.74%, at 25,253.14. The S&P 500 closed up 173.08 points, or 2.35%, at 7,549.94. After Monday's advance, the Dow is now above its midterm election day closing level. However, the S&P 500 and the tech-heavy Nasdaq remain slightly below that level.
Monday's decline in oil prices boosted investor sentiment. US West Texas Intermediate crude futures fell 4.38% to settle at $86.85 per barrel. International benchmark Brent crude fell 5.85% to $92.57 per barrel. On Friday, the market partially rebounded from Thursday's brutal AI-driven selloff, with chip stocks recovering on renewed buying interest. Still, Democrats' strong showing in the midterm elections continued to weigh on the market, with investors worried that tighter regulation of data center construction, energy usage, and development costs could slow the AI infrastructure boom.
The technology sector was also focused on an explosive report on Sunday: Nvidia's board is investigating co-founder and CEO Jensen Huang's relationship with a businesswoman. Nvidia shares were last down 5%. Aside from Nvidia, the "Magnificent Seven" stocks rose. Amazon gained 3%, while Tesla and Alphabet rose 6% and 1%, respectively. Microsoft also gained 3%. Other chip stocks also advanced, with Broadcom surging 9% and Advanced Micro Devices (AMD) jumping 13%. The iShares Semiconductor ETF (SOXX) — which fell about 13% last week — rose more than 7%.
Jay Hatfield, CEO of Infrastructure Capital Advisors, said the recent chip stock selloff was "overdone." He added that the turmoil was still "partially right," because "in the short term, Democrats do bring a policy cloud, but more importantly, so does the long term from 2028 onward." Still, he believes data centers will ultimately "get built in the US." Regarding the broader market, Hatfield said Monday's rebound does not mean "the all-clear has been sounded." In fact, he expects the S&P 500 to trade in a range through year-end. "There are still a lot of unresolved factors in the market," the CEO said, pointing to high oil prices caused by Middle East conflicts and the outlook for Federal Reserve interest rates.
This week, investors will focus on key AI-related earnings — CoreWeave, Cisco, and Applied Materials are all set to report — to assess the technology industry's outlook and whether the recent selloff has further room to run. They will also watch Tuesday's consumer price index and Friday's producer price index for clues on the Federal Reserve's next move.
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