- Wall Street futures rose despite Nvidia CEO's controversy and a 5% premarket stock drop
- Falling oil prices boosted market sentiment with crude down nearly 3% for WTI and Brent
- Technology stocks rebounded after last week's AI-driven sell-off, led by AMD and Lam Research
Wall Street appears to be looking past Nvidia's latest crisis, with US stock futures climbing on Monday as falling oil prices and renewed buying in technology stocks lifted investor sentiment.
The rally comes despite a fresh controversy surrounding Nvidia CEO Jensen Huang, whose relationship with a businesswoman, identified by US intelligence agencies as a Chinese spy, has reportedly come under scrutiny. Nvidia's board has opened an investigation into the matter, sending the chipmaker's shares down around 5% in premarket trading.
However, the fallout has remained largely confined to Nvidia for now, while broader market sentiment has found support from three factors: cooling crude prices, a recovery in technology stocks and investors looking to buy shares after last week's sell-off.
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1. Cooling Oil Prices Ease Market Concerns
A sharp decline in crude prices provided an immediate boost to equity futures on Monday. US West Texas Intermediate crude futures fell nearly 3% to around $88 a barrel, while international benchmark Brent crude declined more than 3% to approximately $95 a barrel.
The decline helped lift risk appetite at a time when investors were already navigating uncertainty around inflation, interest rates and the outlook for global growth. Dow Jones Industrial Average futures jumped 507 points, or 1%, while S&P 500 futures gained 0.7%. Nasdaq 100 futures also advanced 0.7%.
2. Bargain Hunting Returns To Technology Stocks
Technology stocks are also showing signs of recovery after last week's sharp AI-driven sell-off. Buyers returned to semiconductor stocks on Friday, helping the Nasdaq Composite rise 1.09% and the S&P 500 gain 0.31%. The Dow Jones Industrial Average, however, fell 237.33 points, or 0.46%.
Advanced Micro Devices (AMD) surged 11% on Friday, while Lam Research climbed 8%. AMD shares added more than 3% in premarket trading on Monday after Oppenheimer upgraded the stock to Outperform and set a price target of $600.
Market volatility also showed signs of easing, with the CBOE Volatility Index (VIX) falling nearly 10%. The US dollar weakened as well. The recovery follows Thursday's brutal technology sell-off, when investors aggressively reduced exposure to AI-linked stocks.
3. Nvidia's Troubles Remain Stock-Specific For Now
Despite the controversy surrounding Huang, investors have so far shown little inclination to extend the sell-off across the broader technology sector. However, the recovery does not necessarily mean market concerns have disappeared.
Liz Ann Sonders, chief investment strategist at Schwab Center for Financial Research, said the Nasdaq and Nasdaq-100 were in oversold territory following heavy de-risking by traders.
Speaking to CNBC's Fast Money on Friday, Sonders noted that Thursday saw the biggest day of retail selling since the Covid pandemic, according to Vanda Research.
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"Retail has not proven to be the dip buyers that they have been in the past," she said, adding that markets may not yet have fully worked through the selling pressure.
According to CNBC, investors are now turning their attention to a busy week of corporate earnings and economic data. CoreWeave, Cisco and Applied Materials are among the companies scheduled to report earnings, offering fresh clues about spending on AI infrastructure and the sustainability of the technology investment cycle.
On the macroeconomic front, the US Consumer Price Index (CPI) is due on Tuesday, followed by the Producer Price Index (PPI) on Friday. Both readings could influence expectations around the Federal Reserve's next policy move, while investors will also assess whether companies are adjusting capital expenditure plans and future profit margin expectations.
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