Traders work on the floor of the New York Stock Exchange during morning trading on May 31, 2024 in New York City.
Michael M. Santiago | Getty Images
A rebound in Nvidia shares led the S&P 500 and Nasdaq Composite higher on Tuesday, a day after a sell-off in the chipmaking giant.
The broad market S&P 500 added 0.2%, while the Nasdaq advanced 1%. The Dow Jones Industrial Average lagged, losing 266 points, or 0.7%.
Nvidia shares gained than 4%. During the previous session, the stock dropped more than 6% to mark its biggest one-day slide since April 19, when it lost 10%.
The latest decline pushed the AI darling deeper into correction territory, or more than below 13% their intraday record. Other semiconductor stocks were also under pressure on Monday, including Super Micro Computer, Qualcomm and Broadcom.
Nvidia’s losses pushed the Nasdaq down more than 1% on Monday, its biggest one-day loss since April. The Nasdaq-100 also suffered its worst day since April as investors rotated out of chipmakers. This inter-market shift boosted the Dow by more than 200 points, making it the lone U.S. stock benchmark to post a gain in the previous session.
The recent pullback in Nvidia and other tech names is likely a short-term correction, according to Chris Zaccarelli, chief investment officer at Independent Advisor Alliance.
“This year is still all about tech and AI — maybe a little bit of profit taking over the last few days. Clearly valuations are pretty high. But the AI rally has a lot more substance than the dot-com bubble. All the stocks doing well have strong earnings,” Zaccarelli said.
The investor remains confident of the bull market to continue heading into the fall, noting that “AI has replaced rate cuts in terms of kind of keeping the bull market moving forward.”
Several large cap tech names also rose after suffering declines on Monday. Amazon, Meta and Google all rose by more than 1%.
Meanwhile, SolarEdge Technologies sank 17% after announcing plans for a $300 million private offering of convertible notes. Pool Corp also dropped around 8% after adjusting its guidance downward.
