- Wall Street staged its strongest session in months. The S&P 500 rose 2.35% on Monday to clock its best day since April 8, while the tech-heavy Nasdaq Composite climbed 2.74%, according to CNBC, as a sharp decline in oil prices lifted sentiment and investors returned to chip stocks.
- The rebound followed a politically driven rout. Global technology stocks sold off steeply last week on concerns that Democrats’ sweeping victory in the U.S. midterm elections could lead to tighter restrictions on data-center development, potentially hurting demand for artificial intelligence chips and infrastructure.
- The Fed is not sounding relaxed. Chicago Fed President Austan Goolsbee said Monday that “all we hear about is affordability on the business side, the cost,” adding that the AI data center build-out is, “to my eyes, starting to look more just like old-fashioned demand overheating.”
- Futures stalled after the rally. S&P 500 futures gained just 0.07% Monday evening, Dow futures rose 12 points and Nasdaq-100 futures added 0.19%, even as the rally spilled into Asia, where SoftBank Group surged 13.4% and South Korea’s Kospi jumped more than 5% on Tuesday.
What Happened?
U.S. stocks rallied on Monday as lower oil prices and renewed buying in chipmakers reversed part of last week’s sell-off, with the S&P 500 posting its best day since April 8 and the Nasdaq Composite up 2.74%, CNBC reported. Stock futures then traded near the flatline in the evening ahead of Tuesday’s consumer price index. At a Monday event in his district, Goolsbee said “we’ve got to come to terms with this cost-side and inflation-side failure.” Separately, President Donald Trump told reporters at the White House that Nvidia CEO Jensen Huang denied knowing that the woman with whom he had an extramarital affair “was a spy” for China. The strength carried into Asia on Tuesday, where the Korea Exchange briefly suspended program buying after Kospi 200 futures rose 5%.
Why It Matters?
The session suggests investors are willing to buy the AI dip once the political shock fades, but the Fed’s tone complicates the rebound. Goolsbee’s framing of the data center boom as a source of demand overheating means the very spending that drives AI stocks could also keep inflation and rates higher. That matters because the rally leans on cheaper oil and easing pressure on input costs; if the CPI print disappoints, the support from lower crude could be overwhelmed. Analysts at Bitget Wallet told CoinDesk that hotter readings “could reinforce December rate-hike expectations,” a risk that would hit high-multiple tech hardest.
What’s Next?
The October CPI is due at 8:30 a.m. ET on Tuesday, with Dow Jones consensus calling for a 0.3% monthly rise in headline prices and 0.2% in core, slower than September’s 0.6% and 0.3%, according to CoinDesk. Producer prices follow on Nov. 13, minutes from the Fed’s October meeting on Nov. 18 and the PCE report on Nov. 25. Watch whether chip stocks can extend Monday’s gains and whether oil keeps falling, since both drove the rebound.
