A tech rebound pushed the Nasdaq Composite up +1.11% on Monday, but the gain rested on a narrow group of stocks. Of the 503 members of the S&P 500, 324 fell.

The stocks that rose were mostly the ones investors dumped last week — memory makers, chip designers and Amazon, which jumped after Morgan Stanley named it a top pick. The sectors that had sheltered investors during the selloff, including utilities, consumer staples and energy, gave some of those gains back. Homebuilder confidence fell to its lowest level since 2012, and oil traders weighed Houthi claims of strikes on Saudi energy sites against a U.S. waiver of some Russia sanctions.

Index Performance

Cross-Asset Snapshot

A Tech Rebound Carried by a Few Large Stocks

The S&P 500 rose +0.41% to 7,690.73 and the Nasdaq 100 gained +1.17% to 29,529.34. The Dow slipped −0.07% to 51,966.03, and the Russell 2000 added +0.25%.

All five indexes closed well below their midday highs. Shortly before noon the S&P 500 was up about 0.9% and the Nasdaq 100 about 2%, and the Dow, lifted by Amazon, was briefly in positive territory. The Nasdaq Composite won back about a quarter of last week’s −4.48% drop, its worst week since June, The Wall Street Journal noted.

The index gain hid a weak day for the typical stock. Only 176 S&P 500 members rose, and the Invesco S&P 500 Equal Weight ETF (RSP) fell −0.32% while the SPDR S&P 500 ETF (SPY) gained +0.42%. Measured by market value, Amazon alone accounted for roughly 0.18 percentage point of the S&P 500’s gain, about 40% of the total. The ten largest contributors, led by Amazon, Nvidia, Tesla, Alphabet and Microsoft, added up to more than the index’s entire move. The rest of the market, taken together, was a drag.

Two sectors finished higher in any meaningful way. Consumer discretionary rose +1.8%, almost entirely because of Amazon and Tesla, and technology gained +1.4%. Utilities fell −2.0%, real estate −1.2% and financials −0.8%. Inside the utilities sector, only 2 of 31 stocks rose, and in real estate just 1 of 30.

Friday looked like the mirror image. The S&P 500 fell more than 1% that day while half its members rose, because the losses sat in the largest technology stocks. On Monday the same stocks did the lifting, and the rest of the market went the other way.

Last Week’s Rotation Runs in Reverse

To test whether Monday’s moves were a direct reversal of last week, the S&P 500 can be sorted by its performance from October 9 to October 16 and split into five equal groups. The worst fifth of the index had fallen an average of −10.4% last week. On Monday, that group rose +0.73% on average, and 62% of its stocks closed higher.

Every other group fell. The middle fifth, which had gained +2.4% last week, dropped −0.84%, with only a quarter of its members up. The best fifth, up +7.0% last week, lost −0.41%. Across all 503 stocks, the correlation between last week’s change and Monday’s change was −0.37, a fairly strong inverse link for a single session.

Sector data shows the same pattern. Consumer staples, which gained an average of +5.1% per stock last week, fell −0.71% on Monday. Energy, up +3.9% last week, lost −0.66%. Technology, the only sector that had fallen sharply, with an average decline of −7.7%, was the only one where most stocks rose: 62 of its 75 members. Coca-Cola, Procter & Gamble, Eli Lilly and Kinder Morgan, all big winners last week, closed lower.

The rotation had been building for most of the month. Through Friday, the equal-weight RSP had gained +2.9% in October while SPY was up +0.1%, so the typical S&P 500 stock was holding up well even as the largest technology companies sank. Monday cut that gap to about 2.1 percentage points from 2.8.

That kind of market favors fund managers who held fewer AI stocks than the index. Large-cap blend funds tracked by Morningstar started the year with 28.4% of their assets in AI-related stocks, against 36.5% for the S&P 500, and 70% of active stock funds trailed their benchmarks this year through October 8, the Journal reported late Monday.

The bounce was also small. The worst fifth of the index recovered well under a tenth of last week’s loss. Monday looked like investors trimming the defensive positions they had built in a hurry and buying back some of what they had sold. Nothing in the day’s news resolved the financing worries behind last week’s selling.

Memory Stocks Lead, Neoclouds Lag

The Philadelphia Semiconductor Index rose +1.6%, ending an eight-session losing streak. Memory stocks, the hardest hit last week, led the way. Western Digital gained +6.1%, Sandisk +5.5%, Seagate +3.4% and Micron +3.0%, and SK Hynix’s Nasdaq-listed shares rose +4.7%. Marvell rose +4.1%, Intel +2.4% after JPMorgan upgraded it to neutral from underweight, according to Reuters, and AMD and Broadcom each added about 1.8%. Nvidia rose +1.4%.

Memory investors also had a supply-chain report to consider. Nvidia has asked Samsung, SK Hynix and Micron to build the base dies for its custom high-bandwidth memory on TSMC’s 3-nanometer process, Korea’s Seoul Economic Daily reported, as relayed by TrendForce. The companies have not confirmed the report. If accurate, it would standardize a key part of the memory stack across all three suppliers.

Last week’s selling in memory stocks had been fed partly by worries about Chinese competition. ChangXin Memory Technologies, China’s largest maker of DRAM chips, estimated that its revenue for the first nine months of the year had risen about eightfold, citing short supply and sharply higher prices, the Journal reported. Its Shanghai-listed shares fell −7.8% anyway.

Even after Monday, the damage is large. The iShares Semiconductor ETF (SOXX) had fallen for nine straight sessions through Friday, tying its longest losing streak since it began trading in 2001, matched only in May 2006. It is still −14.8% below its October 6 close and has won back less than a tenth of what it lost since then. Sandisk is down −17.4% over the same stretch and Micron −13.5%.

The companies that rent out AI computing capacity had a harder time holding gains. CoreWeave rose as much as 7% early after Goldman Sachs upgraded the stock to buy from neutral. Goldman also cut its price target to $106 from $139, a level that still implied about 73% upside, TipRanks reported. Analyst Gabriela Borges expects revenue per megawatt of capacity to keep rising over the next two years while supply stays tight. She also argued that the 13.5% to 15% yields on CoreWeave’s unsecured bonds overstate what new funding will cost, because the company borrows mainly against its assets.

The stock traded between $59.25 and $65.92 and closed down −0.44% at $61.12, on volume about three times its recent average, The Motley Fool reported. Unsecured bonds made up 22% of CoreWeave’s debt at the end of June, according to FactSet data cited by the Journal, and S&P Global rates the company B, a highly speculative grade. Applied Digital gained +6.7%, Nebius +2.9%, IREN +2.7% and Oracle +1.1%.

CoreWeave’s fade fits last week’s diagnosis. Investors were worried about the cost of financing data centers, and a single analyst upgrade does not change the interest rate on billions of dollars of debt. The 10-year Treasury yield rose 3.8 basis points to 5.136% by 3 p.m., after dipping below 5.09% early in the day, which worked against the companies most dependent on borrowed money.

The Power Trade Missed the Bounce

One part of the AI trade did not join the rebound. Constellation Energy fell −3.0%, NRG Energy −4.2% and Vistra −1.5%. Quanta Services, which builds transmission lines and data center grid connections, lost −2.1%. Constellation and Quanta had each dropped about 9% to 10% last week, so they fell with the rest of the AI trade and then failed to recover with it.

Some of that came from the utilities sector as a whole, which had its worst day of any sector as yields rose. Within the AI trade, though, the split was clear. Investors bought back the chipmakers and memory suppliers whose earnings are already rising, and left behind the power producers whose payoff depends on data centers that have yet to be financed and built.

A setback in Britain showed how much depends on getting electricity to those sites. Microsoft pulled out of a deal to lease capacity at Nscale’s planned 50-megawatt data center in Loughton, outside London, after the Nvidia-backed company said grid problems meant the facility would not open by the end of the year, the Journal reported. Microsoft said its partnership with Nscale was intact and the decision concerned a single site, and Nscale said it was looking at other power sources. The company filed for a U.S. initial public offering last month.

Power producers also borrow to build for data centers, but credit markets treat them very differently from the neoclouds. The cost of insuring CoreWeave’s debt against default for five years rose above 1,000 basis points last week, and Oracle’s reached a record 288 basis points, according to LSEG and S&P Global Market Intelligence data cited by InvestorsHub. Vistra, by contrast, now holds investment-grade ratings: S&P raised it to investment grade in December 2025, and Fitch followed in March with a BBB- rating, the company said. Monday’s selling in power stocks looks more like doubt about how fast data center demand will arrive than fear about the producers’ balance sheets.

The junk-bond market is sorting borrowers the same way. The extra yield on U.S. corporate bonds rated CCC or lower, the riskiest tier, rose to 12.97 percentage points over Treasurys on Friday, according to ICE BofA index data published by the St. Louis Fed. That is the widest since at least October 2023, as far back as the St. Louis Fed’s public series goes, and above the 11.37-point peak of the April 2025 tariff selloff. Further up the ratings scale, single-B bonds, the tier S&P assigns CoreWeave, paid 3.35 points over Treasurys and BB bonds 2.03 points, both well below their April 2025 highs. The investment-grade spread was 0.85 point.

That leaves CoreWeave as an outlier. One of its bonds due in 2031 traded more than 10 points over Treasurys last week, roughly three times the average for its rating and closer to where CCC debt trades. High-yield bonds as a group yield about 8.1%, but most of that is the Treasury rate underneath, since their average spread is 3.31 points. Credit is getting expensive for the weakest borrowers, while the rest of corporate America still pays a modest premium over Treasurys.

Builder Confidence Hits a 14-Year Low

The NAHB/Wells Fargo Housing Market Index fell 3 points to 29 in October, its lowest reading since June 2012, the National Association of Home Builders said. Economists polled by Reuters had expected 31, according to TheStreet. The gauge of future sales fell 5 points to 32, and prospective buyer traffic dropped 5 points to 18, which the group said was the lowest since April 2012 apart from the start of the pandemic.

Builders are paying to keep sales moving. In October, 43% of them cut prices, the highest share since at least 2020, and 65% offered incentives. NAHB Chairman Bill Owens said “mortgage rates have climbed well above 7% in recent weeks.” Separately, 14.5% of pending home sales fell through in September, the highest share on record outside the early months of the pandemic, Redfin data cited by Yahoo Finance showed.

Homebuilder stocks fell. D.R. Horton lost −2.9%, PulteGroup −2.3% and Lennar −1.6%, and the iShares U.S. Home Construction ETF dropped −1.7%. Housing has been the part of the economy most exposed to a 10-year yield above 5%, and the survey suggests the damage is now reaching new construction as well as existing-home sales. September housing starts and building permits are due Tuesday morning.

Oil: Houthi Claims Against a Sanctions Waiver

The two main crude benchmarks went separate ways. Brent settled at $109.55, down −$0.31 or −0.3%, after falling more than $3 earlier in the session. November WTI rose +$2.25 to $103.66, its highest settlement since September 15, Reuters reported. The November contract expires Tuesday and trading was thin. The more active December contract fell −0.5% to $98.54.

Prices dropped early after President Trump signed an executive order on Friday waiving some sanctions and tariffs on Russian energy exports, a move widely seen as an attempt to lower fuel prices before the November 3 midterm elections. Diesel futures also fell and are down −6.5% from their recent record, the Journal reported. The paper also reported that Russian President Vladimir Putin had proposed meeting Trump and Chinese leader Xi Jinping next month to negotiate an end to the war in Ukraine on terms favorable to Moscow. Trump said Monday he would be open to a three-way meeting, mainly to discuss nuclear weapons. Russian supply still faces attacks: Ukrainian drones struck an oil terminal in St. Petersburg on Sunday.

Prices recovered after the Iran-aligned Houthis claimed strikes on Saudi energy, airport and military targets, including an Aramco facility in Yanbu and the Shaybah oilfield. Saudi authorities had not confirmed the claims and Reuters could not verify them. Iran has been giving the Houthis intelligence and targeting help for their attacks on Saudi Arabia, according to a Journal report. Separately, Iran’s navy said U.S. forces fired two light projectiles at its Konarak naval base on the Gulf of Oman early Monday, wounding two personnel, according to Dawn and News.az. The U.S. military did not immediately comment. Saudi Arabia postponed its Future Investment Initiative conference, which was to open in Riyadh on October 26, until next year after repeated Houthi attacks on the capital’s international airport.

The physical picture around the Strait of Hormuz remains tight. Confirmed oil shipments through the strait averaged 10.17 million barrels a day in the seven days through Saturday, about 41% below prewar levels, according to Kpler data cited by the Journal. Counting exports from terminals on the Gulf of Oman and the Red Sea, flows were about 19% below prewar levels. Iran’s Revolutionary Guards said a tanker struck a naval mine in the southern part of the strait on Sunday, Reuters reported. Morgan Stanley estimates that supply from the affected Gulf producers and Russia remains 5.5 million barrels a day below year-earlier levels, and it raised its fourth-quarter Brent forecast to $105 a barrel.

The futures curve reflects that strain. The gap between November and December WTI reached about $5.12 a barrel, a steep premium for oil delivered one month sooner. Brent’s premium over front-month WTI narrowed to about $5.89 from $8.45 on Friday, as U.S. crude for immediate delivery caught up with global prices. Natural gas fell −2.4%.

Rates, Gold and the Fed

Treasury yields rose across the curve. The 10-year yield’s 3.8-basis-point increase was its largest since October 2, according to Dow Jones Market Data cited by the Journal. The 30-year yield gained 3.6 basis points to 5.472%, and the two-year yield rose 2.5 basis points to 4.759%. The dollar index rose +0.2% to 101.995, within 1% of its multiyear high, and Bitcoin added +1.2% to about $81,700.

The VIX fell −7.75% to 18.44. On Friday it had traded as high as 22.31, its first move above 20 since July 30, before closing at 19.99.

European bonds added to the pressure. France’s 10-year yield jumped 14.1 basis points to 4.925% after weekend protests over living costs and planned budget cuts turned into riots in Paris and other cities, while Germany’s rose 4.2 basis points, the Journal reported. At 5%, the French yield would be at its highest in more than two decades. In Paris, shares of Société Générale fell −3.4% and Crédit Agricole −2.6% as French assets sold off.

Few forecasters expect relief soon. About three-quarters of economists surveyed by the Journal this month expect the 10-year yield to end the year at 5% or higher, the paper noted.

Gold settled at $4,154, down −0.65%. The metal held near $4,200 overnight and slid through the New York morning as Treasury yields and the dollar rose, ending near its low of the session.

Rate expectations barely moved. Applying the CME FedWatch method to daily settlements of 30-day fed funds futures puts the odds of a hike at the October 27-28 meeting at about 18% on Monday, little changed from Friday. Those odds stood near 56% the day after the September hike, fell to around 20% at the start of October, and briefly rose to 34% on October 14, in the middle of last week’s run of hot inflation data. The odds of at least one hike by the December 9 meeting were about 93%, close to where they have been all month. The futures price in roughly 27 basis points of tightening by December, slightly more than one quarter-point move.

Bank forecasts are split on the timing. “The Fed has a strong case to hike in October,” Bank of America economists wrote, arguing that inflation has worsened since the September meeting and that a second increase now would leave room for a third in December, the Journal reported. Barclays now expects quarter-point hikes in December and January, up from a single move in December, while BMO strategists expect a hold this month. Fed officials have entered their quiet period ahead of the decision.

Around the Market

Amazon led the Magnificent Seven with a gain of +4.99% to $262.41. Morgan Stanley’s Brian Nowak named the stock his top pick, raised his price target to $350 from $335, and now expects revenue at Amazon Web Services to grow 47% in 2027 and 42% in 2028, helped by higher Nvidia GPU shipments, Investing.com reported. Tesla rose +3.78% two days before its earnings report. Nvidia gained +1.38%, Alphabet +1.06% and Microsoft +0.88%. Apple slipped −0.15% and Meta −0.62% ahead of its own results on Wednesday.

Datadog rose +5.4% after Bernstein upgraded the stock to outperform and raised its target to $350 from $237, according to TheStreet. Palantir gained +4.4% and Moderna +4.1%.

Cleveland-Cliffs jumped +16.3% to $14.10 after reporting its strongest quarter in three years. Adjusted earnings were 28 cents a share, compared with an adjusted loss of 20 cents in the second quarter, and adjusted EBITDA of $612 million beat the company’s own guidance of $575 million, according to its earnings release. The average selling price rose to $1,177 a ton from $1,124. The steelmaker expects adjusted EBITDA of about $715 million in the fourth quarter and more than $4 billion in 2027. It also pushed back a planned blast-furnace overhaul at its Burns Harbor, Indiana, mill to April 2028 to keep the furnace running while demand is strong, the Journal reported.

Among smaller companies, Silgan Holdings rose +6% to $40.06 after agreeing to buy Trivium Packaging for about $3.4 billion, and Silence Therapeutics jumped +126% to $19.58 after Merck KGaA agreed to acquire it for about $1.1 billion in cash, according to the Journal. Disc Medicine gained about +37% after a late-stage trial showed that its experimental pill, bitopertin, eased symptoms of a rare disorder that makes sunlight painful, the paper reported.

Among large-cap decliners, Honeywell Aerospace fell −3.3% after gaining 6.4% last week. Valero lost −2.6% and Kinder Morgan −2.4% as energy gave back part of last week’s rally. Charles Schwab fell −2.6% and Wells Fargo −2.5%.

After the close, 3M rose more than 5% in extended trading after saying it had issued Amazon warrants to buy up to 3.1 million shares at $164.89 over seven years, as part of a deal to supply optical connectors and other data center products. Most of the warrants vest only after Amazon spends $6 billion on those products, the Journal reported.

My Take

I read Monday as a relief bounce, not a change in the market’s mood. Chip stocks had just come off one of the longest losing streaks on record, and some buying after a run like that is normal. I’m still cautious and see this as a temporary rebound for now. If Tuesday brings broad gains instead of another tech-only rally, the case for a bottom gets stronger.

A rally carried by chip stocks alone, while spreads on the weakest junk bonds keep widening, looks temporary to me. I still see the hyperscalers’ earnings and capital spending, starting with Meta’s on Wednesday, as the thing to watch.

The overnight session pointed the same way. Nasdaq 100 futures gave back part of Monday’s gain during Asian trading, falling as low as 29,576, −0.5% from their level at Monday’s close. Asian markets did not follow Wall Street’s chip rebound. Early Tuesday, South Korea’s Kospi was down −3.4% and SK Hynix −3.5%, and Japan’s Nikkei fell −0.9%, the Journal reported.

Past streaks of this length support caution. Since 1994, the Philadelphia Semiconductor Index has fallen for eight or more straight sessions seven times before this month. In every case, the index closed below the streak’s final low within ten sessions of its first up day, and in five of the seven it was lower 20 sessions later. Four of those episodes came during the 2002 and 2008 bear markets, and seven cases are too few for firm conclusions, but none of them marked a clean bottom on the first bounce.

The Week Ahead

Earnings take center stage, and the companies that pay for the AI build-out report midweek.

On Tuesday, GE Aerospace, RTX, 3M and General Motors report before the open. September housing starts and building permits arrive at 8:30 a.m. Netflix, Intuitive Surgical, Capital One, United Airlines and SpaceX report after the close. The WTI November contract also expires.

On Wednesday, Meta and Tesla report after the close, along with Texas Instruments, Lam Research and IBM. Meta’s capital spending plans are the most important single number of the week for the AI trade.

On Thursday, Procter & Gamble, Union Pacific, Lockheed Martin, Blackstone and Comcast report in the morning, along with weekly jobless claims. Western Digital, Newmont and Bloom Energy follow after the close. On Friday, American Express and SLB report, and S&P Global’s October purchasing managers’ indexes and the final University of Michigan consumer sentiment reading are released.

Bottom Line

Monday was a reversal of last week’s trades, and a small one. The stocks sold hardest bounced, the stocks bought for safety slipped, and the index rose because the bounce was concentrated in the largest companies.

The rebound also showed where investors are still unwilling to go. They bought chipmakers and Amazon, whose earnings are growing now, and stayed away from the debt-funded neoclouds and the power producers whose payoff is further off. With the 10-year yield above 5.1%, builder confidence at a 14-year low and the riskiest junk bonds paying the widest spreads in at least three years, the cost of capital is still setting the terms.

Meta’s spending guidance on Wednesday will show whether the companies paying for the AI build-out are still willing to keep paying.