S&P 500 surges over 1% as semiconductors lead broad rally

The S&P 500 rose more than 1% to reclaim its 50-day moving average, while the Nasdaq Composite advanced over 1.7% as semiconductor stocks powered a broad-based rebound.

"The market is pricing in a stabilization of the AI spending narrative after last week's selloff triggered by the OpenAI IPO delay," said Michael Wilson, chief equity strategist at Morgan Stanley.

The Semiconductor Index jumped 3.5%, recovering most of Friday's losses. The Nasdaq 100 expanded gains to 2%, while the Dow Jones Industrial Average also traded higher. All 11 GICS sectors finished in positive territory, with technology and consumer discretionary leading alongside semiconductors. The advance-decline ratio on the New York Stock Exchange favored advancers by a roughly 3-to-1 margin.

Monday's rally pushed the S&P 500 back above its 50-day moving average at 7,363, a level it had lost on Friday, opening the path toward the retracement zone of 7,429 to 7,474. The next test for bulls comes with this week's non-farm payrolls data, which will shape expectations for the Federal Reserve's September policy meeting.

The rebound follows a volatile week in which the Nasdaq spent four consecutive sessions below its 50-day moving average after reports that OpenAI may delay its planned IPO until next year. That news had raised questions about the durability of the AI infrastructure spending cycle, sending SoftBank Group down 12% in Tokyo and dragging South Korea's KOSPI nearly 6% lower.

Monday's session reversed that narrative. Chip stocks recouped losses across the board, with the Philadelphia Semiconductor Index's 3.5% gain marking its best single-day performance in weeks. The move coincided with easing concerns about the US-Iran conflict, as both nations agreed to pause military attacks and resume peace talks, according to reports. Brent crude held below $73 a barrel, down from conflict-era highs, providing additional tailwinds for equities.

Cross-asset context

The US dollar index traded at 101.3, near a 13-month high, while Brent crude stood at $72.60 a barrel in early trade. The 10-year US Treasury yield edged lower as investors positioned for Friday's non-farm payrolls report, which economists expect to show an addition of 110,000 to 114,000 jobs in June, down from 172,000 in the prior month. A weaker-than-expected print could reinforce expectations that the Federal Reserve will hold rates steady at its September meeting.

Technical levels in focus

The S&P 500's reclaim of the 50-day moving average at 7,363 shifts the technical bias back to bullish in the near term. The next resistance zone sits at 7,429 to 7,474, representing the short-term retracement area. A break above that range could open the path toward the July highs. On the downside, the 50-day MA now serves as support, with the swing bottom at 7,237 as the next line of defense.

The Nasdaq Composite, which had been the weakest of the major indices last week, recovered above 25,500 but remains below its own 50-day moving average at 25,778. A decisive break above that level would confirm the broader index has joined the rally.

This article is for informational purposes only and does not constitute investment advice.