Investors moved quickly to scoop up beaten-down shares. Stocks scrambled higher early Monday, with “buy the dip” action after the chip sector’s 10% plunge on Friday made Wall Street’s worst day of the year. The bounce was led by the same stocks that had fallen hardest. Shares of Micron Technology, the memory chipmaker that led the latest leg of the bull market, were up close to 10% after falling 13% on Friday, while Nvidia and Broadcom also rose. Tech Startups
The rebound followed a brutal stretch. The S&P 500 fell 2% the prior week, its first negative week in 10 weeks, while the Nasdaq tumbled 4.7%, with AMD, Marvell, and Micron plunging 10.9%, 16.7%, and 13.3%, respectively.
Big AI deals fueled the recovery
Fresh corporate news gave investors reasons to buy. The deals all pointed back to the AI infrastructure boom.
Corning surged more than 9% after Amazon announced a multibillion-dollar agreement for the materials science company to provide optical fiber to power and connect its rapidly expanding U.S. data centers. Nvidia shares gained after it announced a partnership with South Korean tech giant SK Hynix for advanced memory for its AI factory buildout. There was also an index milestone. Marvell Technology surged about 9% after the AI chipmaker was announced as a new addition to the S&P 500.
The macro cloud hasn’t lifted
Despite the rebound, the forces behind the selloff remain. The concern is that strong economic data could keep the Federal Reserve from cutting rates. Strong jobs data and solid economic fundamentals raised concerns that the Fed is unlikely to cut rates soon, with the CME FedWatch tool showing more than a 50% probability of a rate hike by year-end. The yield on the 10-year Treasury climbed above 4.5% and the 30-year above 5%, a headwind for AI-centric companies that need huge amounts of capital.
Geopolitics added another layer. Israel launched airstrikes on villages in southern Lebanon amid ongoing cross-border exchanges with Iran-backed Hezbollah, though Iran’s military said it had ceased strikes against Israel.
What it means for investors
The chip stocks rebound is encouraging, but it does not erase the underlying tension. The market remains heavily concentrated in a few AI winners, which cuts both ways.
When sentiment is positive, those names drive the indexes higher. When fear takes over, the same concentration amplifies the downside. With inflation data and a Fed meeting on the calendar, volatility is likely to stay elevated.
For now, the dip-buyers have the upper hand. Whether the rebound holds will depend less on any single deal and more on what the Fed signals about the path of interest rates.
This article is for informational purposes only and does not constitute investment advice.
