Key Points
- Nasdaq rebounds after a weekly slump driven by AI
- The rebound at the opening is said to have increased the market value by $470 billion.
- Wall Street analysts have differing opinions on whether this rebound can continue.
The Nasdaq 100 rose by about 1.44% in the early trading snapshot. Meanwhile, a market alert estimated that by the time the opening bell rang, the valuation of the U.S. stock market had increased by approximately $470 billion. This market capitalization figure is an estimate at a specific point in time and does not represent actual capital inflows, nor is it equivalent to the confirmed daily increase.
The Nasdaq Composite Index opened up 0.98% at 26,395.29 points; the S&P 500 Index rose 0.57% to 7,702.77 points. The Dow Jones Industrial Average initially fell 0.05%, indicating that this rebound was mainly concentrated in technology stocks.
Nahui rebounded after the sharp decline of AI stock
Monday's buying sentiment came after a difficult week. Last week, the Nasdaq Composite Index fell by about 4.5% due to investors' concerns about the high cost of AI infrastructure, rising corporate borrowing costs, and the profitability of massive investments in computing power.
Semiconductor stocks encountered particularly severe selling pressure. The Philadelphia Semiconductor Index fell by about 10% last week, following a round of selling that totaled $1.64 trillion among major chip manufacturers.
NVIDIA, AMD, and Intel all participated in the rebound on Monday, with chip manufacturers being one of the strongest sectors in the early trading session. This reversal indicates that after a rapid decline in stock prices, investors are willing to re-evaluate the valuations related to AI.
However, this round of rebound has not dispelled the financial concerns that triggered the correction.
CoreWeave is a typical example. After the yield on its bonds maturing in 2031 rose above 16%, the company experienced a significant weekly decline, which reflects an increasing market skepticism about debt-driven AI expansion.
Dan Ives Sees opportunities, but technical analysts remain cautious
Analyst Dan Ives believes that the sell-off of AI stocks has created opportunities to buy into companies that are expected to benefit from long-term demand for computing power.
In a recent comment on CNBC, he stated that the adjustment range was too large and specifically mentioned his optimism about companies such as Microsoft, NVIDIA, Palantir, and CrowdStrike.
His core argument is that even if investors temporarily re-evaluate valuations, the demand for AI infrastructure remains very strong.
This view contrasts with the warnings of strategist BTIG. The latter questions whether this round of rebound can continue given that the market's technical conditions are still fragile.
The Craig Johnson of Piper Sandler specifically indicates that market breadth has deteriorated, and an important upward trend line on NASDAQ has been broken below. His analysis shows that relying solely on a few rebounding large-cap stocks may not be sufficient to establish a sustained market reversal.
The previous decline in the AI stock indicated how quickly a weak sentiment could spread among semiconductor manufacturers when investors simultaneously start to reduce their positions.
The financial reports of large technology companies may determine whether the rebound can continue.
The next major test for Wall Street will come this week, when several technology companies will announce their quarterly results.
Meta is scheduled to release its financial report on October 21st. Analysts expect its revenue to be around $63.3 billion, while management will face scrutiny of its annual capital expenditure plan, which could reach up to $145 billion.
The tension between optimistic sentiment and debt concerns has also extended to institutional positions. The latest retail investment data shows that during a relatively calm trading week, the net purchase of neocloud stocks reached $700 million, despite the credit market becoming increasingly cautious.
Ethan Mercer
Ethan Mercer is a financial journalist who covers cryptocurrency, stocks, and the global economy. He studied economics and finance before turning to market reporting, with a particular focus on Bitcoin, stocks, monetary policy, and investor sentiment. His work focuses on explaining daily market fluctuations and the broader trends behind them.
