US stocks rebounded sharply on Monday, with the Nasdaq Composite closing at a record high as investors returned to AI and semiconductor shares, while falling oil prices and lower Treasury yields eased two of the biggest pressures on equities.
The Nasdaq rose 2.26% to 27,122.09, its first record-high close since June 2. The S&P 500 gained 1.49% to 7,764.70, ending about 0.4% below its August 13 record, while the Dow Jones Industrial Average advanced 0.71% to 52,048.83.
The rally was led by semiconductor stocks. Intel surged 12.2%, Arm Holdings jumped 17%, and the PHLX Semiconductor Index gained 4.3%. Advanced Micro Devices climbed about 10%, pushing the chipmaker’s market value above $1 trillion for the first time.
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The move suggests investors are again focusing on the earnings and spending cycle surrounding artificial intelligence after a sharp technology selloff the previous week triggered by warnings from executives and researchers about the risks of increasingly powerful AI systems.
AI-related companies have become a major source of earnings growth for the broader market, making semiconductor demand a particularly important indicator for investors trying to determine whether the AI investment cycle still has room to run.
Meta also joined the rally, with its shares jumping 11.4% after Wells Fargo raised its price target following the launch of the company’s Muse AI assistant.
The broader market received an additional boost from falling energy prices and Treasury yields. The benchmark 10-year Treasury yield moved back below 5%, while Brent crude futures fell below $100 a barrel for the first time in more than a week before settling at $100.34.
The decline in oil prices was linked to speculation that diplomatic efforts surrounding the Middle East conflict could make progress during the United Nations General Assembly in New York this week. US President Donald Trump said he would be open to meeting Iranian President Masoud Pezeshkian, who is expected to attend the gathering.
The shift in oil and bond markets mattered because both had recently been acting as significant constraints on equities. Higher crude prices raise concerns about inflation, while higher Treasury yields increase the discount rate applied to future corporate earnings and can make bonds more attractive relative to stocks.
“We’ve been kind of programmed to follow the price of oil and the yield on the US 10-year, and if you look at those two things today, they’ve shifted from being headwinds to tailwinds for this market, at least in the near term,” said Art Hogan, chief market strategist at B. Riley Wealth.
The improvement in those two markets, however, does not eliminate the Federal Reserve’s inflation problem. The central bank raised its benchmark interest rate last week for the first time in three years, and traders now see roughly a 50% probability of another increase next month, according to CME’s FedWatch tool.
That leaves the market sensitive to economic data and comments from policymakers. At least 10 Federal Reserve officials are scheduled to speak this week, giving investors additional clues about whether the central bank intends to continue tightening monetary policy.
Valuations also remain an important consideration. The S&P 500 was trading at just under 19 times expected earnings on Friday, according to LSEG data, its lowest forward valuation since 2023. At the same time, much of the improvement in earnings expectations has been concentrated among AI-related technology companies.
That creates a tension in the current rally. Lower valuations can provide support for equities, but the market’s earnings outlook is increasingly dependent on whether the AI investment boom continues to generate revenue and profits at a pace that justifies the enormous spending on chips, data centers and computing infrastructure.
Monday’s semiconductor rally suggests investors remain willing to finance that thesis. AMD’s move above a $1 trillion market capitalization was particularly significant because it signals how strongly investors are valuing companies positioned to benefit from continued AI infrastructure spending.
Other themes also contributed to the market’s risk-on tone. Bitcoin rose more than 6% to a seven-month high, lifting shares of Coinbase and Strategy. US-listed companies with exposure to Greenland also surged after progress in diplomatic discussions between Washington and Copenhagen. Greenland Mines tripled, while Greenland Energy more than doubled.
Investors are also watching the expected US-China summit later this week. Discussions could include an extension of the two countries’ trade truce, the Middle East conflict and AI regulation. A report said Washington had proposed extending the truce for six months, while Beijing was seeking a longer extension.
The gains were not universal. Paramount Skydance fell nearly 3% after Reuters reported that the company had reached a settlement with California and 11 other states that had sued to block its proposed $110 billion acquisition of Warner Bros. Discovery.
Eight of the 11 S&P 500 sector indexes finished higher. Communication services led the advance with a 4.16% gain, followed by information technology, which rose 2.4%.
Market breadth was more mixed than the headline indexes suggested. Advancing stocks outnumbered declining stocks in the S&P 500 by only 1.4 to one. The S&P 500 recorded seven new highs and 29 new lows, while the Nasdaq posted 64 new highs against 127 new lows.
Trading volume was relatively strong, with 16.5 billion shares changing hands on US exchanges, above the 20-session average of 16.2 billion.
Monday’s rally thus amounted to more than a simple rebound in technology stocks. Investors simultaneously received relief from lower oil prices and Treasury yields, while semiconductor gains reinforced the view that AI spending remains a powerful source of corporate earnings growth.
The key question for markets is how long those conditions will last. With the Fed still focused on inflation and AI valuations increasingly dependent on continued infrastructure spending, the latest record for the Nasdaq has strengthened the market’s momentum without removing the forces that could challenge it.