U.S. stocks rallied on Monday, recouping the majority of last week’s significant losses as oil prices trended downward. This market strength persisted despite a decline in Nvidia, one of the most influential stocks on Wall Street.
The S&P 500 climbed 2.3 per cent, marking its second consecutive gain following a sell-off driven by concerns that Democratic successes in the U.S. midterm elections might hinder the development of AI data centres. This performance, the index’s strongest single-day showing since April, leaves it just 3.4 per cent shy of the record high reached last month.
The Dow Jones Industrial Average surged 1,104 points, or 2.2 per cent, while the Nasdaq composite advanced 2.7 per cent.
Broad market gains were supported by a 5.8 per cent decline in the price of Brent crude, which settled at US$92.57 per barrel. Prices have retreated from levels exceeding US$112 earlier this month amid stock market.
Constellation Energy rose 10.5 per cent after the utility company reported summer profit and revenue figures that surpassed analyst expectations. The firm has been bolstered by recently announced agreements to supply power to data centres for major technology companies.
These data centres, and the criticism they face from voters regarding rising electricity costs, are under increased scrutiny following Democratic victories in statehouses across the nation during last week’s election. There is growing concern that governments may implement industry restrictions, which could lead to reduced demand for artificial intelligence chips, electricity, and other products associated with the AI boom.
These fears compounded existing anxieties within the industry that the construction of AI data centres might decelerate due to the rising costs of borrowing. Prior to these developments, critics had already suggested that AI stock valuations had become inflated and were potentially in a bubble.
Beyond the power sector, other stocks tied to AI infrastructure also performed well on Monday. Advanced Micro Devices gained 13.3 per cent, effectively reversing its 11 per cent loss from the previous week. CoreWeave climbed 5.6 per cent, recovering from a 15.4 per cent drop last week.
This occurred even as Nvidia, the company synonymous with the AI boom, fell 4.3 per cent. The chipmaker announced it is investigating its CEO, Jensen Huang, after he acknowledged an intimate relationship with a business executive whom U.S. intelligence identified as gathering information for China.
Nvidia’s board stated it has “no reason to believe” that either national security or Nvidia secrets were compromised but confirmed that its inquiry would review all available information.
Guo Jiakun, a spokesperson for China’s Ministry of Foreign Affairs, dismissed the allegations as “nothing but smears against China.”
In total, the S&P 500 rose 173.08 points to 7,549.94. The Dow Jones Industrial Average climbed 1,104.02 to 52,389.75, and the Nasdaq composite gained 673.71 to 25,253.14.
International markets also saw gains across much of Europe and Asia. France’s CAC 40 rose 1.2 per cent, and Japan’s Nikkei 225 jumped 2.3 per cent. Markets in China and South Korea were less buoyant, with Seoul’s Kospi index falling 0.8 per cent.
In the bond market, Treasury yields remained relatively stable following significant volatility last week. The yield on the 10-year Treasury rose slightly to 4.87 per cent from 4.86 per cent late Friday.
This remains well below the peak of over 5.30 per cent reached last month, when it hit a two-decade high due to concerns regarding inflation and the scale of U.S. government debt. The decline in Treasury yields over the past month has helped lower rates for mortgages and other loans, while also providing support for stock prices and other investments.
