The Nasdaq 100 Index surged more than 2% as dip buyers invested in technology stocks that had recently experienced a downturn. This rebound comes after major indexes, including the S&P 500 and Nasdaq Composite, reached record highs earlier this year, driven by optimism around artificial intelligence and strong corporate earnings. However, a recent sell-off saw the S&P 500 decline 0.1% and the Nasdaq 100 fall 0.4% in the days leading up to this bounce, particularly impacting chipmakers.
Adding to the positive sentiment, a de-escalation of US-Iran hostilities and a drop in oil prices provided further support to the market. Although oil prices had previously risen due to tit-for-tat strikes between the US and Iran, a subsequent increase in crude shipments through the Strait of Hormuz led to lower prices, easing concerns about inflation and potential Federal Reserve interest rate hikes. This suggests investors are looking beyond short-term geopolitical turbulence.
The Philadelphia SE Semiconductor Index, despite soaring 85% earlier in the year, faced a pullback as investors assessed if the trade was overheated. However, blowout results from memory chipmaker Micron Technology helped support the group. The CBOE Volatility Index (VIX), often called the "fear gauge," has also fallen, indicating that investors anticipate less turbulence in the near future and are focusing on corporate earnings and future expectations.
