Nasdaq chip rebound snaps longest semiconductor slide since 2008

A Nasdaq chip rebound gave Wall Street some relief on Monday, Oct. 19, after last week's AI-driven selloff. The Philadelphia Semiconductor Index rose 1.61% to 11,316.34, ending an eight-session losing run that had cut about 15.7% from its value, the longest such streak since October 2008.

What happened

The Nasdaq Composite gained 290.85 points, or 1.11%, to 26,430.89, and the S&P 500 added 0.41% to 7,690.73. The Dow Jones Industrial Average slipped 36.38 points, or 0.07%, to 51,966.03. On Friday, the S&P 500 and the Nasdaq had posted their biggest weekly declines since late June.

Gains were concentrated in a handful of heavyweights. Nvidia rose 1.4%, Intel added 2.4% after J.P. Morgan lifted its rating to neutral, and Micron climbed about 3%. Amazon jumped 5% after Morgan Stanley named it a top pick, and Tesla advanced 3.8%. Seven of the S&P 500's 11 sectors still closed lower, with utilities down 2% and real estate off 1.2%.

Breadth was poor. Declining issues outnumbered advancers by 1.69 to 1 on the NYSE, and the Nasdaq Composite logged 361 new lows against 31 new highs, according to Reuters data.

Volume was light. About 15.27 billion shares changed hands on U.S. exchanges, below the 20-session average of 17.26 billion. Consumer discretionary led the sectors with a 2.7% gain, and Cleveland-Cliffs surged 16% after beating third-quarter profit estimates. Monday also marked the 39th anniversary of the 1987 Black Monday crash, the Dow's largest one-day decline.

Why it matters

The bounce looked more like short covering than a change in the story. Michael James of Rosenblatt Securities told Reuters that nothing had changed over the weekend except that sentiment had become so negative a rebound was due, and he warned the market was not yet in the clear. The selloff that drove the chip index losing streak was about how AI infrastructure gets financed, and that question remains open.

Credit markets stayed cautious. CoreWeave, which fell more than 25% last week over its roughly $50 billion debt load, gave up early gains after a Goldman Sachs upgrade to buy and closed 0.4% lower. CNBC said its five-year credit default swaps remained at distressed levels. Peers Nebius and Iren rose 2.9% and 2.7%.

Rates also capped the move. Treasury data put the 10-year par yield at 5.15% on Monday, up from 5.09% on Friday, as investors priced the risk of another Federal Reserve hike after energy-driven inflation. A Nasdaq chip rebound built on cheaper money is hard to sustain while yields push higher.

What's next

Asia did not follow. On Tuesday, the Kospi fell 2.31% and the Nikkei 225 lost 0.79%, CNBC reported, with SK Hynix down 4.07% and SoftBank Group off 4.46%. U.S. futures were up only 0.1% to 0.2% overnight.

Earnings now decide the next leg. General Motors reports before Tuesday's open, while United Airlines and SpaceX report after the close, and Meta, Tesla and Texas Instruments report on Wednesday. Roughly 70 S&P 500 companies report this week, and the index's components are listed on the Nasdaq PHLX semiconductor page. Spending guidance from hyperscalers will show whether the Nasdaq chip rebound can broaden beyond Monday's leaders.