Nasdaq gains 2% as tech shares recover from Monday sell-off

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By Caroline Valetkevitch

NEW YORK (Reuters) -U.S. stocks rose on Tuesday, with artificial intelligence-linked and other technology shares bouncing back from sharp losses the previous day as investors snapped up bargains.

The Nasdaq led gains. AI chip leader Nvidia added 6.8%, giving the index its biggest boost, a day after its 17% drop erased about $593 billion from its market value in the biggest single-session loss for any company.

The S&P 500 technology sector rose 3%, the most of any S&P 500 sector, while an index of semiconductor shares was up 0.5%.

Investors also were eager to hear from Apple, Microsoft and other companies when they report quarterly results this week. Shares of Apple were up 3.9%.

The tech sell-off followed Chinese startup DeepSeek’s launch of AI models it said were on a par or better than industry-leading U.S. rivals at a fraction of the cost.

“We’re getting the typical bounceback rally you’d expect when you have news that’s not very specific and more of a potential for a future change,” said Rick Meckler, partner, Cherry Lane Investments, a family investment office in New Vernon, New Jersey.

“Some of the tech market, particularly around AI, was ready for a bit of a sell-off, and this news provided the excuse for it. Today you’re seeing the bargain hunters come back in and also those who are discounting the news about DeepSeek since we don’t really know very much about it.”

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Nvidia’s forward price-to-earnings ratio, a common valuation metric, earlier hit its cheapest level since December 2023.

The Dow Jones Industrial Average rose 114.64 points, or 0.25%, to 44,826.86, the S&P 500 climbed 54.28 points, or 0.90%, to 6,066.40 and the Nasdaq Composite gained 380.18 points, or 1.96%, at 19,721.42.

Fourth-quarter 2024 U.S. earnings season is in full swing, with shares of Royal Caribbean up 12.4% after the cruise operator forecast annual profit largely above expectations.

Boeing shares, last up 2.1%, were volatile after the planemaker reported its biggest annual loss since 2020. General Motors shares fell 8.8% following its results and outlook, with investors weighing the threat of tariffs that could hit the automaker’s business.

U.S. President Donald Trump said late on Monday he plans to impose tariffs on imported computer chips, pharmaceuticals and steel.

On Wednesday, the Federal Reserve is widely expected to hold its lending rate steady in its first interest-rate decision of the year.

Declining issues outnumbered advancers by a 1.44-to-1 ratio on the NYSE. There were 140 new highs and 42 new lows on the NYSE.

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