TLDR
- The Nasdaq rose over 1% on Monday after its worst single-day drop in more than a year on Friday
- Chip stocks led the recovery, with Micron up 9% and Nvidia gaining around 2%
- Iran said it was ending military operations against Israel, easing oil price pressure
- Last Friday’s selloff was triggered by a strong May jobs report that raised fears of a Fed rate hike
- Key events ahead include a CPI report on Wednesday and the expected SpaceX IPO on Friday
Wall Street started the week higher on Monday as investors bought back into tech stocks following a sharp selloff on Friday.
The Nasdaq Composite rose about 1.2% to 26,025. The S&P 500 gained 0.6% and the Dow Jones Industrial Average edged up around 0.2%.
Friday’s session saw the Nasdaq drop 4%, its worst day in over a year. The S&P 500 also snapped a nine-week winning streak.
The selloff was triggered by a strong May jobs report. The data led investors to bet the Federal Reserve could raise interest rates later this year.
Analyst David Rosenberg pushed back on that view. He said two-thirds of the jobs growth came from leisure and hospitality, local government, and health and education sectors, driven in part by World Cup preparation.
Chip stocks were hit hardest on Friday, but staged a strong recovery Monday. Micron jumped 9% while Nvidia added roughly 2%.
Nvidia CEO Jensen Huang suggested the dip was a buying opportunity for those looking to invest in artificial intelligence.
Iran-Israel Tensions Add Pressure Before Easing
Oil prices spiked earlier in the day after Iran fired missiles at Israel for the first time since April. Israel struck back despite calls from President Trump for both sides to stand down.
Prices pulled back after Iran announced its military operations against Israel were over.
Brent crude and West Texas Intermediate futures both trimmed gains following the ceasefire announcement.
The dollar turned lower on hopes for a deal between the two countries. Treasury yields also cooled after earlier rises tied to the jobs data.
Some analysts had flagged the market as overextended after strong gains in April and May. Paul Hickey of Bespoke Investment Group said an unwind was expected given how far prices had climbed.
As tech stocks fell last Friday, money moved into defensive sectors. Healthcare was among the areas that saw inflows during the rotation.
Investors will be watching Wednesday’s Consumer Price Index report to see if higher oil prices are feeding into core inflation.
Oracle is also set to report earnings on Wednesday, giving the market another data point on enterprise tech spending.
The week could close with a historic event. SpaceX is expected to go public on Friday in what would be the largest IPO on record.
Markets remain sensitive to both economic data and geopolitical developments as the week gets underway.
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