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S&P 500, Nasdaq rise as AI stocks rebound and oil prices ease ahead of major US company earnings this week
S&P 500 and Nasdaq rise as AI stocks rebound and oil prices fall, while investors watch major company earnings and rising concerns over AI spending.
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The S&P 500 and Nasdaq Composite rose on Monday as artificial intelligence (AI)-related stocks recovered from last week's sharp fall. Lower oil prices also supported the market ahead of several major company earnings reports due this week.
The S&P 500 and Nasdaq Composite recorded their biggest weekly declines since late June on Friday. Investors were worried that higher interest rates could make it more expensive for companies to invest in AI infrastructure, especially data centers, Reuters reported.
Why are investors worried about AI spending?
The recent market selloff reflected growing concerns about how companies will pay for the expensive expansion of AI infrastructure. These concerns have put pressure on companies that have helped drive the US stock market's bull run, which recently completed its fourth anniversary.
The Dow Jones Industrial Average fell on Monday as shares of JPMorgan Chase, Sherwin-Williams and Visa recorded small declines. The trading session also took place on the 39th anniversary of Black Monday, the October 1987 stock market crash when the Dow plunged 22.6%, Reuters reported.
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Chip stocks recover as Broadcom and Micron rise
Semiconductor stocks rose as investors returned to AI-related shares. Broadcom gained 2.2%, while Micron jumped 4.3%. The Philadelphia Semiconductor Index rose 2.5% and was on track to end an eight-day losing streak, its longest series of daily declines since October 2008.
Amazon.com shares gained 2.3% after Morgan Stanley named the e-commerce and cloud computing company its “top pick.” The move added to the recovery in technology stocks, Reuters reported.
CoreWeave shares recover after Goldman Sachs upgrade
Goldman Sachs upgraded data center company CoreWeave to “buy” from “neutral,” saying the recent fall in its share price had created a buying opportunity. CoreWeave shares were last up 0.2% on Monday after falling more than 25% the previous week, according to Reuters.
Concerns about CoreWeave's $50 billion debt load contributed to its sharp fall last week. Investors are worried about the amount of borrowing needed to support the expansion of AI infrastructure.
Sam Stovall, chief investment strategist at CFRA Research, said the technology stock selloff last week was driven by rising interest rates and concerns surrounding CoreWeave. He warned that the problems might continue, adding that investors would closely examine company earnings this week to identify businesses most at risk.
Also read: JPMorgan invests $5 billion in US industries tied to economic and national security
Meta, Tesla and SpaceX earnings in focus
Investors are preparing for results from major companies this week. Meta is expected to report earnings on Wednesday, with expectations that it will beat Wall Street estimates. Elon Musk-led Tesla is also scheduled to report on Wednesday, while SpaceX is expected to report on Tuesday.
At 9:52 a.m. Eastern Time on Monday, the Dow Jones Industrial Average was down 102.02 points, or 0.20%, at 51,900.39. The S&P 500 gained 34.27 points, or 0.45%, to 7,693.71, while the Nasdaq Composite rose 249.13 points, or 0.95%, to 26,389.16, Reuters reported.
Technology stocks lead market gains
Most companies in the S&P 500 were trading lower, but the technology sector led the gains. The sector rose 1.2%, helping lift the overall index despite losses across many other stocks.
Brent crude oil futures fell 1.3% to around $108 a barrel. The decline followed US President Donald Trump's decision to waive some sanctions on Russia.
Intel shares gained 5.1% after JPMorgan upgraded the stock to “neutral” from “underweight.” The rating change indicated a more positive view of the chipmaker's shares, according to Reuters.
Shares of steelmaker Cleveland-Cliffs surged 8.7% after the company reported third-quarter profit above analysts' expectations.
On the New York Stock Exchange (NYSE), declining stocks outnumbered advancing stocks by a ratio of 1.18 to 1. On the Nasdaq, advancing stocks outnumbered declining stocks by the same ratio, according to Reuters.
The S&P 500 recorded eight new 52-week highs and two new lows. The Nasdaq Composite recorded 12 new highs but 120 new lows, showing that many individual Nasdaq-listed stocks remained under pressure despite the index's overall rise.
