U.S. equities started the week on a positive note Monday, with the Dow Jones Industrial Average climbing 143 points (0.28%) as semiconductor stocks bounced back from a sharp selloff last week. The S&P 500 advanced 0.56%, while the Nasdaq Composite rose 0.87%, led by a recovery in chipmakers.
The rebound followed a challenging week for Wall Street, during which the S&P 500 fell 1.6%, the Nasdaq dropped 2.9%, and the Dow lost 0.9%. The VanEck Semiconductor ETF (SMH) had plunged nearly 9% last week, marking its third weekly decline in four weeks, as concerns over stretched valuations weighed on the sector.
Chip Stocks Lead Recovery
Semiconductor shares were the standout performers Monday, with memory chipmakers posting some of the strongest gains. Western Digital, Seagate Technology, Micron Technology, and SanDisk each rose between 4% and 6%. Advanced Micro Devices gained approximately 4.3%, while Astera Labs and Teradyne advanced more than 5%. The VanEck Semiconductor ETF climbed over 2.6%.
The recovery came after the Philadelphia Semiconductor Index entered bear market territory on Friday, closing more than 20% below its late-June record high. Despite the recent pullback, the index remains up about 57% year-to-date. The sector has been a primary beneficiary of heavy artificial intelligence spending by hyperscale technology companies, which has driven U.S. equity indexes to record highs this year. However, last week's selloff raised concerns that valuations had become stretched after months of strong gains.
For a deeper look at the memory sector's recent volatility, see our analysis on Micron, SanDisk Rebound 3% and 2.5% as Dip Buyers Test Memory Sector After 30% Rout.
Big Tech Earnings in Focus
Investor attention is now shifting to second-quarter earnings, with several major technology companies scheduled to report results this week. Alphabet, Tesla, Intel, and IBM are among the firms releasing quarterly reports. Intel and Texas Instruments will be closely watched for indications of whether the semiconductor industry can regain momentum following the recent correction.
According to LSEG data, analysts now expect S&P 500 companies to deliver year-over-year earnings growth of 26% for the second quarter, up from an earlier estimate of 23.7%. The latest earnings season follows encouraging inflation data released last week, which eased some concerns about near-term Federal Reserve tightening. Major U.S. banks also delivered a solid start to second-quarter reporting, although those positive developments were overshadowed by weakness across technology stocks.
Markets are currently pricing in about a 12% probability of a quarter-point interest rate increase at the Federal Reserve's July meeting and roughly a 53% chance of another increase in September, according to CME's FedWatch Tool.
For more on what Wall Street expects from Big Tech, read Big Tech Earnings: Wall Street Demands Proof of AI Monetization on $725B Capex.
Geopolitical Risks and Oil Prices
Investors also continued to monitor developments in the conflict involving the United States and Iran. The U.S. carried out its ninth consecutive day of strikes on Iran overnight. However, market sentiment improved after Iranian officials indicated that intermediaries had continued exchanging messages with Tehran, raising hopes that diplomatic discussions could continue.
Oil prices fluctuated throughout the session. Brent crude briefly traded above $90 per barrel for the first time since early June amid renewed disruptions to shipping through the Strait of Hormuz before easing to trade above $88. U.S. West Texas Intermediate crude also pared earlier gains to trade just above $82 per barrel.
For context on how geopolitical tensions are affecting global markets, see European Stocks Dip as US-Iran Tensions Push Brent Above $90, Travel Sector Hit.
Outside the technology sector, Domino's Pizza shares gained about 3% after the company reported quarterly revenue that slightly exceeded Wall Street expectations.
This article is for informational purposes only and does not constitute financial advice.
