U.S. tech stocks rebound as Nasdaq ends five-day losing streak

Article by: Tide Research

On Monday, U.S. tech stocks rallied across the board, driven not by any new catalyst but by a correction of excessive pessimism over the previous five trading days. Weighted stocks such as Tesla, Google, and NVIDIA rose in tandem, pushing all three major indices to close higher, indicating that while confidence in the AI investment cycle has been shaken, it has not been completely undermined.

The S&P 500 rose 1.18% to 7,440.43, with the Nasdaq leading gains at 2.07% to 25,820.144, and the Dow Jones increased 0.59% to 52,182.74, setting a new high. The VIX volatility index fell 4.13% to 17.65. The rebound is reasonable, with no signs of excessive euphoria.

Tesla rose by 8.5%, the largest gain, while Google (officially added to the Dow Jones on Monday) climbed nearly 5%. NVIDIA reversed its five-day losing streak and advanced over 1%. SpaceX rose more than 7%, reflecting renewed market appetite for growth stocks, even though it won’t be added to the Nasdaq-100 until next week. This indicates that investors have not lost confidence in major tech stocks—they’ve simply made reasonable adjustments after prior highs.

The Philadelphia Semiconductor Index rose 3.83% to 13,709.66. TSMC ADR advanced 5.24%, AMD rose 3.43%, Marvell increased over 4%, and Western Digital posted the strongest gain at 10%. However, Super Micro Computer declined over 8%, indicating that not all semiconductor stocks were treated equally. The information technology sector as a whole rose 1.7%, suggesting the rebound was driven primarily by large-cap stocks rather than broad-based gains.

Oil prices rebounded to $70.75 per barrel (up 2.20%), with Brent crude reaching $73.15 per barrel (up 1.661%). However, gold fell 1.77% to $4,016.36 per ounce, and silver dropped 1.20% to $58.2841 per ounce. This reflects not only a short-term easing of tensions between the U.S. and Iran, but also a genuine decline in market demand for safe-haven assets. Bitcoin rebounded above $60,000 during trading, showing strong correlation with technology stocks, indicating that crypto assets have become an extension of tech stock sentiment.

The U.S. Dollar Index fell 0.24%, while the yen hit its lowest level in nearly four decades at 161.94. The 10-year U.S. Treasury yield declined 0.20 basis points to 4.3666%, while the 2-year yield rose 0.62 basis points to 4.0983%. The curve slightly steepened, suggesting a modest rebound in market expectations for long-term growth.

After mutual strikes over the weekend between the U.S. and Iran, both sides claimed a ceasefire, but Iran immediately denied Trump’s statement that talks would take place in Doha on Tuesday. The U.S. Defense Secretary warned that conflict could reignite at any moment. This pattern of mutual denial has been seen too many times in the Middle East. From a supply fundamentals perspective, vessels in the Persian Gulf continue to depart, Iranian crude oil is still finding buyers, and Ukraine’s strikes on Russian refining facilities have instead increased the amount of crude available for export. An oil price rebound is unlikely to last unless a large-scale conflict actually erupts.

The Supreme Court ruled that Cook may temporarily remain on the Federal Reserve Board, and bond markets reacted almost indifferently—this uncertainty has already been priced in. More noteworthy is JPMorgan’s view: current 10-year Treasury yields are 27 basis points below their model-based valuation, the largest deviation since March 2023. In other words, the bond market may be overvalued. If Thursday’s jobs report again shows strong data, it will directly boost expectations of tightening, putting downward pressure on bond prices.

Goldman Sachs expects S&P 500 earnings to rise 22% year-over-year in Q2, with AI infrastructure-related stocks contributing nearly 60%. However, this expectation is already high; the market’s focus has shifted from “whether cloud providers will invest in AI” to “how companies will actually invest in AI and what their ROI will be.” The answer to this question will determine the trajectory of tech stocks over the next two quarters.

Monday's rebound indicates that market confidence in technology has not been shattered, but rather is undergoing an adjustment after prior highs. However, the momentum behind the rebound is insufficient to push prices to new highs; it reflects more of a recovery from extreme pessimism to normal pessimism.

For bulls, the fundamental backdrop of the AI investment cycle remains unchanged: corporate demand for productivity won’t stop, the likelihood of the Israel-Iran conflict escalating into a full-scale war is low, and the 10-year U.S. Treasury yield has indeed become cheaper. But the problem is that tech stocks rebounded from five consecutive days of declines to nearly new highs too quickly. Such recoveries are often short-term rallies rather than true bottoms. Semiconductor inventory issues remain unresolved, and corporate AI return-on-investment questions still lack answers. Although 0-DTE options traders were forced to close positions on Monday, they will likely resume heavy shorting next week if equities rise again.

This week’s earnings calls will be ticking time bombs. NVIDIA, AMD, Micron, and other chip stocks will provide detailed insights into their customers’ AI purchasing intentions. If major clients indicate on these calls that AI spending is slowing down or being delayed, tech stocks could plunge again—that’s the real risk. Avoid chasing highs in the short term; wait for earnings guidance before next Monday.