Wall Street closes mixed as chip stocks rebound after 8-day slide

Wall Street closed mixed Monday as bargain hunters moved into semiconductor and AI-related shares that had been battered in recent sessions.

The Philadelphia Semiconductor Index snapped an eight-session losing streak to lead the NASDAQ higher, though caution over the heavy capital spending and profitability of AI companies kept a lid on broader gains. Upcoming earnings from major technology firms are expected to set the direction for markets in the weeks ahead.

The Dow Jones Industrial Average fell 36.38 points, or 0.07 percent, to close at 51,966.03 Monday (local time) at the New York Stock Exchange. The S&P 500 rose 31.29 points, or 0.41 percent, to 7,690.73, while the tech-heavy NASDAQ Composite gained 290.85 points, or 1.11 percent, to finish at 26,430.89.

Semiconductor and AI stocks, which had sold off sharply last week, rebounded to drive the NASDAQ's advance. Concerns about persistent US inflation and a prolonged high-interest-rate environment had fueled selling pressure particularly among AI-related companies that require large-scale financing, but buyers returned Monday on the view that the recent declines had gone too far.

The Philadelphia Semiconductor Index had fallen 15.7 percent over the previous eight sessions — its longest consecutive losing streak since October 2008 — before rising 1.61 percent Monday to snap the run.

Among individual stocks, Nvidia gained 1.38 percent, AMD rose 1.76 percent, Micron Technology advanced 2.97 percent and SK hynix climbed 4.67 percent.

"After the close on Friday, there was a sense that the selling had gone too far," said Michael James, managing director at Rosenblatt Securities. "There was no particularly bad news over the weekend, and with sentiment having deteriorated excessively, the time had come for a rebound."

Caution over AI-related investment spending persisted, however. CoreWeave, which had been at the center of the recent AI selloff, fell another 0.44 percent. The company's share price had dropped more than 25 percent last week amid concerns about its roughly $50 billion debt load.

With Meta and Tesla set to report quarterly earnings, investors are watching closely to see whether massive AI-related capital expenditures are translating into actual sales and profit growth.

Analysts say the key variable driving share prices going forward will not be the growth outlook for the AI industry itself, but whether companies can improve their profitability enough to justify elevated valuations and heavy investment costs.