Semiconductor rebound lifts S&P 500, Nasdaq 1.3% ahead of Big Tech earnings

U.S. stocks snapped a three-day losing streak as a 5.2% surge in semiconductor shares reignited confidence in artificial intelligence spending.

The S&P 500 rose 0.9% to 7,509.20 and the Nasdaq Composite climbed 1.3% to 25,837.21, driven by a broad recovery in chip stocks ahead of major technology earnings this week. The Dow Jones Industrial Average added 385 points, or 0.7%, to 52,224.64.

"Investors are buying back into semiconductors ahead of earnings because they have fear of missing out that these companies could report outsized beats," said Lindsey Bell, chief investment strategist at 248 Ventures in Charlotte, North Carolina. "But when stocks rally sharply ahead of earnings, it makes it more difficult for them to run in response."

The PHLX Semiconductor Index surged 5.2%, its biggest one-day gain in a month, after falling more than 20% from its June record. Sandisk jumped 14.3%, Micron Technology added 12.2% and Seagate Technology rose more than 10%. Intel gained 8.6%, Advanced Micro Devices climbed 7% and Applied Materials advanced 7.2%. Dutch AI infrastructure provider Nebius Group skyrocketed 18.8% after Nvidia disclosed a strategic equity stake of more than 9%.

Nine of the 11 S&P 500 sectors finished higher, with technology leading at 2.35% and energy up 1.15%. Consumer staples fell 1% and communication services lost 0.85%. Advancing stocks outnumbered decliners by a 1.65-to-1 ratio on the Nasdaq and 1.44-to-1 on the New York Stock Exchange. The S&P 500 recorded 10 new 52-week highs and seven new lows. Trading volume was light, with 16.14 billion shares changing hands compared with the 19.56 billion 20-day average.

The stakes are high for the coming days. Alphabet reports earnings Wednesday, followed by Tesla, Intel and IBM later this week. Investors are zeroing in on Alphabet's capital expenditure guidance as a bellwether for whether the AI infrastructure build-out will maintain its torrid pace — a pullback could reignite the selloff that erased hundreds of billions from chip valuations this month.

Treasury yields ticked higher alongside equities, a pattern that Mark Malek, chief investment officer at Siebert Financial, said suggests dip-buying may be masking underlying inflationary pressures. "The markets are behaving right but for the wrong reasons," he said. The 10-year yield rose as investors priced in persistent price pressures even as stocks rallied.

Oil benchmarks extended their advance, with Brent crude closing at $91.01 a barrel, the highest since June 10, after two Saudi crude tankers reversed course in the Red Sea following threats from Yemen's Houthi movement. West Texas Intermediate rose 2% to $84.91. The dollar index edged higher, adding to headwinds for multinational earnings.

Among individual movers, 3M rallied 7.3% after lifting its full-year profit forecast, while Hasbro jumped 8.8% on raised revenue and profit guidance. Danaher sank 11%, the biggest decliner in the S&P 500, after trimming its core revenue growth outlook. MSCI tumbled 10% after raising its full-year operating expense forecast despite a quarterly revenue beat.

This article is for informational purposes only and does not constitute investment advice.