Wall Street rally and Nvidia slump after tech selloff, Digi Mart USA News: A renewed wave of dip buying drove stocks toward their best day since April in the wake of a technology selloff that roiled Wall Street. The market also gained as oil prices fell.
Following a drawdown in one of the world’s most-crowded trades, a gauge of chipmakers jumped 6.5 per cent. The S&P 500 rose 2 per cent and the Nasdaq 100 added 3 per cent.
That gain came despite a 5.5 per cent slump in Nvidia amid an investigation into chief executive Jensen Huang after his admission of an affair with a woman identified in a series of reports as a suspected Chinese spy.
“For now, the market is showing the resilience needed to turn last week’s weakness into another buying opportunity,” said Mark Hackett at Nationwide. “That’s an encouraging sign.”
Sentiment was also helped by a drop in energy costs on optimism around efforts to end the Iran war. President Donald Trump struck a more conciliatory tone, saying it is “highly unlikely” he will order extensive strikes on the Islamic Republic.
That helped reduce anxiety about inflation ahead of a report on consumer prices, the last before the Federal Reserve’s December meeting.
Still, benchmark Treasuries fell amid gains in riskier assets. “We continue to see economic conditions as supportive of corporate fundamentals,” said Brock Weimer at Edward Jones.
“Thus, we recommend that investors maintain an overweight allocation to equities relative to fixed income.”
The sharp deterioration in momentum that played out in equities last week may have pushed investor pessimism close to peak levels, according to JPMorgan Chase strategists led by Dubravko Lakos-Bujas. They said the recent tech selloff represented a reset rather than the start of a structural downturn in the AI investment cycle.
The rebound does not remove the risks created by concentrated positioning and elevated expectations, said Ulrike Hoffmann-Burchardi at UBS Chief Investment Office. While it is unlikely last week shut the door on volatility, what unfolded may have been more about investors repositioning within the AI trade rather than abandoning it altogether, according to Chris Larkin at E*Trade from Morgan Stanley.
“There’s good reason to believe the stock market’s long-term rally is intact, especially given that the selloff overshadowed another week of strong economic data,” he added.
