US stocks saw a significant uptick on Monday as semiconductor shares rebounded, buoyed by reports of Intel's potential collaboration with Alphabet and easing tensions in the Middle East.
Intel shares surged by 8.5% after reports suggested that Alphabet had selected the company to produce 3 million in-house chips, with Nvidia also evaluating their technology. This news contributed to the broader recovery in semiconductor stocks, with Nvidia and Broadcom shares rising by 1.7% and 2.8%, respectively, and Micron Technology soaring 8.7%.
The market's positive momentum was further supported by easing geopolitical tensions, as Iran's military announced the cessation of its attacks on Israel, which had previously driven up oil prices by more than 5%. Energy shares rose 1.3% as crude prices stabilized, last up by less than 2%.
“Sometimes these moves get too far too fast and you need a bit of a pullback. And, that pullback is likely going to find investment in other sectors.”
Art Hogan, chief market strategist at B Riley Wealth
In addition to geopolitical developments, stronger-than-expected jobs data for May had previously led to market volatility, with traders anticipating potential interest rate hikes. The Federal Reserve's rate increase probability stands at 42% for a 25 basis point hike in December, according to CME Group's Fedwatch tool.
Marvell Technology saw a nearly 10% jump in its stock price as it is set to join the S&P 500 index on June 22. Meanwhile, Flex's shares also experienced a marginal increase after securing a spot in the index.
The broader market indices reflected these gains, with the Dow Jones Industrial Average rising by 146.11 points to 51,015.91, the S&P 500 gaining 50.54 points to 7,434.28, and the Nasdaq Composite climbing 280.09 points to 25,989.52.
Background
The market's recent movements underscore the ongoing optimism around AI-driven growth, despite concerns over the economic impact of geopolitical tensions.
As the market continues to react to both technological advancements and geopolitical developments, investors should remain vigilant for upcoming economic reports and potential shifts in monetary policy.
