New York — The U.S. stock market saw a vigorous rally on Monday, with major tech firms leading the way. The S&P 500 gained 1.2%, recovering more than two-thirds of its losses from the previous week, marking it as the first weekly decline in the last four weeks. As of 10:15 a.m. Eastern time, the Dow Jones Industrial Average rose by 183 points, or 0.4%, while the Nasdaq composite surged by an impressive 1.9%.
Notably, Nvidia played a significant role in energizing the market, climbing by 4%. As a central player in the ongoing artificial intelligence (AI) boom, Nvidia faced scrutiny for its stock price surge last week, drawing parallels to the dot-com bubble of the year 2000. Taiwan Semiconductor Manufacturing Co. (TSMC), a key chip supplier for Nvidia, also experienced a positive response, with its U.S. shares increasing by 3.1% after reporting nearly 17% revenue growth year-over-year in October, even if it represented a slowdown compared to prior performance. Additionally, Palantir Technologies enjoyed an impressive rise of 8%, marking the largest gain in the S&P 500.
Despite the gains in the tech sector, many other stocks within the S&P 500 struggled, reflecting a more subdued market environment. Health insurance stocks faced downward pressure as uncertainty brewed over the extension of expiring healthcare tax credits, an ongoing point of contention in Washington that has contributed to the longest government shutdown in U.S. history. Humana and Cigna saw declines of 2.6% and 0.7%, respectively.
The ramifications of the government shutdown are increasingly felt, evidenced by the tens of thousands of flight cancellations over the weekend due to staffing issues among air traffic controllers, who have been unpaid for weeks. The shutdown has delayed critical economic reports, creating potential volatility in the markets if accumulated data contradicts expectations for interest rate cuts.
The prevailing sentiment among market analysts is that the Federal Reserve might continue its strategy of lowering interest rates to stimulate an economy that has shown recent signs of slowing, particularly in the job market. Historically, lower interest rates have been viewed positively by Wall Street as they tend to uplift investment prices and enhance economic activity. However, the Fed has flagged a potential pause in rate cuts if inflationary pressures escalate, as lower rates could exacerbate inflation concerns.
In the absence of timely updates from the government, traders are focusing on corporate earnings reports for indicators of economic health. Tyson Foods, for example, saw its shares increase by 2.1% after reporting profits that outstripped analyst expectations, driven by price hikes between 11% and 17% in its beef and pork products. Remarkably, around 80% of S&P 500 companies have exceeded profit forecasts this quarter, a necessity in light of heightened scrutiny regarding inflated stock valuations. Furthermore, many companies are offering optimistic outlooks for future earnings, with projections for 2026 nearly recovering to pre-tariff announcement levels.
Globally, stock markets exhibited a positive trend, with indexes climbing across Europe and Asia. South Korea’s Kospi index stood out with a notable increase of 3%, as chip manufacturer SK Hynix—collaborating with Nvidia on AI technology—saw its stock rise by 4.5%. Its competitor, Samsung Electronics, also benefited, increasing by 2.8%. Meanwhile, the bond market saw the yield on the 10-year Treasury yield slightly dip to 4.10%.
Overall, the rally on Wall Street reflects a complex interplay of technology sector optimism, corporate profit resilience, and broader economic challenges, suggesting that while uncertainties remain, the markets are showing adaptability and potential for growth.