Chip stocks rally, Nasdaq jumps 1.5% as tech leads broader market higher

Nasdaq leads as semiconductor index rebounds 2.3%

US equities ended mostly higher Monday, with the tech-heavy Nasdaq Composite outperforming amid a revival in semiconductor shares. The Philadelphia Semiconductor Index rose 2.3%, snapping a three-day losing streak. Nvidia climbed 3.6%, Advanced Micro Devices added 2.8%, and Intel gained 1.9%. The S&P 500 advanced 0.8% to 5,234, while the Dow Jones Industrial Average underperformed, rising just 0.2% as UnitedHealth and Procter & Gamble weighed.

Trading volumes were slightly above the 20-day average, suggesting genuine buying interest rather than a dead-cat bounce. The rally was broad-based, with nine of the 11 S&P 500 sectors finishing higher. Energy and materials lagged, while technology and communication services led.

Three catalysts driving the chip-led recovery

Oversold conditions trigger dip-buying in Nvidia and AMD

Semiconductor stocks had fallen 8–12% over the prior two weeks on profit-taking and valuation concerns. Monday's bounce was partly technical: the RSI on the SMH (VanEck Semiconductor ETF) had dipped below 30, signaling oversold territory. Dip-buyers stepped in, pushing prices higher. Traders also cited options positioning—heavy put activity had created a gamma squeeze dynamic as dealers hedged.

AI demand narrative remains intact despite macro headwinds

Positive commentary from key industry players reinforced the AI capex story. A Morgan Stanley note highlighted that cloud capital expenditure is expected to grow 25% year-over-year in 2025, with hyperscalers prioritizing GPU clusters. This supports demand for Nvidia's H100 and upcoming Blackwell chips. AMD also announced a new AI accelerator deal with an unnamed large enterprise, further stoking optimism.

Key levels to watch: Nasdaq 18,000 and 10-year yield at 4.5%

The Nasdaq is approaching resistance at 18,000, a level that has capped gains twice in March. A clean break above could open the door to 18,500. On the downside, support sits at 17,500. The 10-year Treasury yield eased 3 basis points to 4.47%, providing some relief for growth stocks. However, if yields spike above 4.6% again, tech could come under renewed pressure. Traders should monitor RSI and MACD on the Nasdaq for momentum confirmation.

What this means for traders: positioning for a choppy earnings season

Monday's rally suggests the market is still willing to buy dips in high-conviction themes like AI, but the lack of follow-through in the Dow indicates lingering caution. With first-quarter earnings season kicking off next week (JPMorgan, Citigroup, and Delta Air Lines report Friday), traders should expect increased volatility. The current setup favors a balanced approach: holding core positions in semiconductor leaders while using signal rooms to monitor real-time sentiment shifts.

A key risk is the Fed's next move. Several FOMC members are scheduled to speak this week, and any hawkish tilt could reverse Monday's gains. The market is pricing in a 62% chance of a June rate cut, but stubbornly high services inflation (ISM Services PMI at 52.6) may keep the Fed patient. Traders should avoid chasing breakouts without confirmation from volume and breadth.

For beginners, this environment underscores the importance of understanding technical levels and macro catalysts. A disciplined approach—using stop-losses and position sizing—can help navigate the chop. If you haven't yet opened a brokerage account, check out our broker comparison guide to find a platform that suits your trading style.