U.S. stocks started the week on a positive note Monday, with major indices recovering from last week's steep selloff. The Dow Jones Industrial Average opened 252 points higher, while the S&P 500 rose about 0.94% and the Nasdaq Composite gained 1.34%. The rebound was fueled by a resurgence in semiconductor shares and easing fears of an escalation in the Middle East.
Chip stocks, which had suffered a historic rout on Friday that erased roughly $1 trillion in market value, led the recovery. Nvidia and Broadcom climbed between 1.5% and 2.8%, while Micron surged over 8% after dropping 13% in the previous session. The iShares Semiconductor ETF also jumped about 4%, bouncing back from its worst daily decline in over six years. Last week's selloff was triggered by a disappointing AI outlook from Broadcom and a stronger-than-expected May jobs report, which raised concerns that the Federal Reserve might maintain tighter monetary policy. The Nasdaq-100 dropped 4.8% on Friday, its largest volatility-adjusted decline since October 2025.
Bank of America warned that the unwind may not be over. Analyst Chintan Kotecha noted that another 90 basis points to 2% of downside could trigger broader systematic fund deleveraging. Leveraged and inverse ETFs sold a record $12 billion in Nasdaq exposure on Friday alone.
Geopolitical tensions also eased after Iran's military announced its first wave of attacks on Israel had concluded, and reports indicated Israel halted strikes at the request of President Trump. Oil prices, which had surged over 5% earlier, pared gains, with West Texas Intermediate crude up just over 1% near $91 per barrel.
Attention now turns to upcoming U.S. inflation data and the expected SpaceX IPO, both of which could influence the Federal Reserve's policy path and broader market sentiment.
