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Stocks opened higher across the board Monday as chips stocks rebounded from Friday’s drubbing. But while the tech-heavy Nasdaq Composite and the broader S&P 500 held their gains through the close, the blue-chip Dow Jones Industrial Average was not so resilient.
At the close, the Nasdaq was up 0.9% at 25,929 and the S&P 500 was 0.3% higher at 7,405. The Dow, on the other hand, was down 0.2% at 50,786.
On Friday, a broad sell-off in semiconductor stocks weighed down the three main equity benchmarks, with the Nasdaq incurring its biggest one-day drop in over a year.
“The AI-fueled tech rally got a bit of a reality check last week, but after nine straight up weeks, the market was arguably due for at least a reset,” says Chris Larkin, managing director of trading and investing at E*TRADE from Morgan Stanley. “The fact that Friday’s strong jobs report appeared to add fuel to the selling indicates the market could be even more focused on inflation going forward.”
And while Larkin says Friday’s sharp losses did not “derail the rally,” it does suggest market participants are “more sensitive to negative surprises in the near term.”
This makes the Wednesday morning release of the May Consumer Price Index (CPI) an even bigger economic calendar event than usual, because recent hot inflation readings have erased any expectations for rate cuts this year.
According to CME Group FedWatch, futures traders don’t expect any rate cuts at all in 2026. Earlier this year, betting odds were for at least one quarter-point cut.
The Federal Open Market Committee may even consider rate hikes this year, writes David Payne, staff economist and reporter for The Kiplinger Letter, in the Kiplinger inflation outlook. “The Fed generally discounts energy price fluctuations in its deliberations on interest rate policy. But the central bank will also note that ‘core’ inflation (excluding food and energy) is likely to creep upwards as the year progresses,” he explains.
Wednesday’s inflation date hits one week before the Fed — now led by Chair Kevin Warsh — issues its latest policy decision.
Intel, Micron lead chip rebound
Chip stocks created the biggest buying pressure to start the week, rebounding after disappointing Broadcom’s (AVGO, +2.8%) guidance sparked an industry-wide meltdown.
Intel (INTC, +11.2%) and Micron Technology (MU, +9.9%) were the best-performing S&P 500 stocks Monday, followed closely by KLA Corp. (KLAC, +9.3%).
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