By Elsie Kamsiyochi
U.S. stock markets moved higher on Monday as investors returned to technology and semiconductor stocks following last week’s sharp sell-off, while signs of reduced military tensions in the Middle East helped improve overall market sentiment.
The rally was led by chipmakers, which staged a strong recovery after suffering significant losses just days earlier. Investors appeared encouraged by fresh developments in the semiconductor industry, including reports that Alphabet has selected Intel to manufacture approximately three million of its internally designed chips. The news sparked renewed confidence in Intel’s manufacturing capabilities, sending the company’s shares soaring more than 8%.
The broader technology sector also benefited from the renewed optimism. Nvidia, Broadcom, and Micron Technology all posted notable gains, with Micron emerging as one of the session’s strongest performers. The Philadelphia Semiconductor Index climbed sharply as traders rushed back into a sector that had lost more than $1 trillion in market value during Friday’s dramatic downturn.
Market analysts suggested that last week’s decline was partly the result of investors taking profits after a powerful rally fueled by enthusiasm surrounding artificial intelligence. Concerns about potentially tighter monetary policy, combined with disappointing reactions to some corporate earnings reports, had triggered fears that valuations within the technology sector had become stretched. Monday’s rebound, however, indicated that many investors still view AI-related companies as long-term growth opportunities.
Beyond the technology sector, improving geopolitical developments provided another boost to Wall Street. Investors welcomed reports suggesting that hostilities between Israel and Iran were easing after a new round of military exchanges. Iranian officials indicated that the initial phase of attacks against Israel had concluded, while reports from Israeli media suggested that Israel had suspended further strikes following pressure from U.S. President Donald Trump.
The apparent reduction in tensions helped calm fears of a wider regional conflict that could disrupt global energy supplies. Earlier in the day, crude oil prices had surged more than 5% amid concerns over the conflict. However, as reports of de-escalation emerged, oil prices pulled back from their highs, although they remained modestly higher. Energy stocks still benefited from elevated crude prices and recorded gains during the session.
By mid-morning trading, all three major U.S. stock indexes were firmly in positive territory. The Dow Jones Industrial Average rose nearly 0.3%, while the S&P 500 gained approximately 0.7%. The technology-heavy Nasdaq Composite led the advance, climbing more than 1% as investors piled back into growth stocks.
Attention also remained focused on the Federal Reserve and the outlook for interest rates. Stronger-than-expected U.S. employment data released last week reinforced expectations that policymakers may need to keep monetary policy restrictive for longer than previously anticipated. Futures markets currently indicate a growing possibility that the Federal Reserve could raise interest rates again before the end of the year.
Investors are now looking ahead to the upcoming consumer inflation report, which could provide important clues about whether rising energy prices linked to the Middle East conflict are beginning to affect broader inflation trends. The data is expected to play a significant role in shaping expectations for future Federal Reserve decisions.
Adding to the positive mood, Citigroup raised its year-end forecast for the S&P 500, projecting that the benchmark index could surpass the 8,000-point mark before the end of 2026. The bank cited resilient corporate earnings, continued strength in artificial intelligence investments, and improving economic conditions as key reasons for its bullish outlook.
Several individual companies also attracted investor attention. Marvell Technology surged nearly 10% after confirmation that it will be added to the S&P 500 index later this month, a move that is expected to increase demand for the stock from index-tracking funds. Electronics manufacturer Flex also edged higher after securing a place in the benchmark index.
Meanwhile, pharmaceutical giant Eli Lilly gained ground after reporting encouraging results from trials of its next-generation obesity treatment, retatrutide. The drug not only promoted significant weight loss but also demonstrated benefits in reducing sleep apnea severity and easing knee pain, strengthening expectations for its future commercial potential.
Overall, Monday’s trading session reflected a return of investor confidence after a turbulent end to the previous week. While concerns remain over interest rates, inflation, and geopolitical risks, the recovery in semiconductor stocks and signs of easing tensions in the Middle East helped fuel a broad-based market rally, reinforcing optimism that the bull market driven by artificial intelligence and corporate earnings growth still has momentum.
Source Reuters
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