US stock markets staged a comeback as "dip buyers" emerged, with a renewed focus on artificial intelligence and expectations of a strong economy. Chipmakers like Nvidia Corp. and Micron Technology Inc. led the gains, climbing 5.6% after their largest selloff since 2020. This rebound propelled the S&P 500 to resume its advance, despite most of its component companies facing declines. The Nasdaq 100 also saw a significant increase of 1.6%. In contrast, Apple Inc. experienced a 1.9% drop after a lukewarm reception to its next-generation AI platform.
This rebound follows a volatile period for technology stocks. The Nasdaq Composite had its worst week in months, tumbling approximately 4.6% during the week of June 22-27 as investors rotated out of high-growth tech into defensive sectors. The S&P 500 fell 2.0% during the same period, while the Dow Jones Industrial Average rose 0.6%. This rotation was attributed to reassessments of lofty valuations in AI-driven stocks and concerns over geopolitical developments and oil prices. SpaceX, for example, fell 16% on June 22 and briefly traded below its debut price, while Alphabet dropped about 5% amid questions about AI optimism.
Despite the recent downturn, the market experienced a significant tech rally, particularly on Monday, June 8, as chipmakers surged. The S&P 500 Index rose 0.3%, and the Nasdaq 100 Index jumped 1.6%, marking its best day in over a week. Micron Technology, despite a 6.7% drop on a separate day that created pressure on the market, had previously seen its stock roughly quadruple due to AI demand. However, the gains in the broader market were somewhat offset by fears surrounding AI stock valuations, as rising memory prices from companies like Apple prompted concerns about lower demand and higher product costs.
