Semiconductor Makers Propel Markets Higher as Tech Recovery Takes Hold

Equity markets climbed today with the S&P 500 Index advancing 0.25%, the Dow Jones Industrials rising 0.57%, and the Nasdaq 100 Index gaining 0.42%. Futures pointed to continued momentum, with March E-mini S&P futures up 0.20% and March E-mini Nasdaq futures up 0.34%. The primary driver of this rally centered on semiconductor makers and AI infrastructure stocks bouncing back from Friday’s selling pressure, reversing losses that had weighed on the broader market. This rebound by makers in the chip sector demonstrated the market’s continued reliance on technology stocks as a foundation for index strength.

Beyond semiconductors, additional support came from US rare-earth stocks surging on expectations that President Trump would establish a strategic critical minerals reserve funded with $12 billion to reduce China dependence. However, headwinds emerged from ongoing US government funding negotiations, cryptocurrency weakness, and concerning economic signals from China, creating a mixed backdrop for traders navigating volatile intraday action.

Chipmakers and Tech Infrastructure Drive Index Momentum

Semiconductor makers dominated today’s gainers, showcasing investor appetite for technology exposure despite recent volatility. Sandisk led the sector with a gain exceeding 7%, powered by CTBC Securities Investment Service Co Ltd initiating buy coverage with a $660 price target. Western Digital, Seagate Technology Holdings, and Advanced Micro Devices all appreciated more than 3%, while Intel and Lam Research climbed over 2%. This coordinated strength among semiconductor equipment and memory manufacturers underscored how global supply chain demand for chip production drives broader market sentiment.

The rebound in makers reflected renewed confidence in artificial intelligence infrastructure buildout, as major cloud platforms and data center operators continue capital deployment. This dynamic highlighted the sector’s outsized influence on market direction, particularly when macroeconomic uncertainty surfaces in other segments.

Critical Materials and Geopolitical Shifts Create Divergent Paths

US rare-earth stocks rallied sharply, with USA Rare Earth jumping over 9% and United States Antimony Corp advancing more than 8%. MP Materials and Critical Metals Corp each gained over 4%, while Ramaco Resources increased by 1%. These moves reflected investor enthusiasm around Trump’s announced $12 billion strategic stockpile initiative aimed at reducing reliance on Chinese critical minerals.

Conversely, energy producers faced substantial headwinds as WTI crude oil plummeted more than 5% amid signals of easing geopolitical tensions. President Trump’s statements regarding US-Iran diplomatic discussions and Iran’s foreign ministry’s hopeful comments about negotiations weighed on energy valuations. ConocoPhillips, Diamondback Energy, Occidental Petroleum, APA Corp, and Chevron each declined more than 2%, while Exxon Mobil, Halliburton, Phillips 66, and Valero Energy retreated by at least 1%.

Cryptocurrency Exposure Faces Sharp Pullback

Digital asset-related stocks entered steep decline territory as Bitcoin fell more than 7% to reach a 9.75-month low. According to Coinglass data, nearly $590 million in long Bitcoin positions faced liquidation over the weekend. Consequence for related equities proved severe: Strategy declined more than 3%, MARA Holdings fell more than 3%, Galaxy Digital Holdings retreated more than 3%, and Coinbase dropped more than 2%. Notably, Riot Platforms bucked the downtrend with a modest 0.39% gain.

China’s Economic Contraction Signals Global Headwinds

China’s Shanghai Composite Index declined 2.48% to a four-week low following weaker-than-expected manufacturing data. The January manufacturing Purchasing Managers’ Index fell 0.8 points to 49.3, below the expected flat reading at 50.1. More concerning, the non-manufacturing PMI unexpectedly contracted 0.8 points to 49.4 versus expectations for an increase to 50.3, marking the steepest contraction pace in three years. This economic weakness in the world’s second-largest economy raised questions about global growth momentum and corporate profit trajectories.

Overseas markets reflected mixed sentiment following Beijing’s data releases. The Euro Stoxx 50 gained 0.35%, Japan’s Nikkei Stock 225 declined 1.25% from recent highs, and European government bond yields moved in divergent directions with German 10-year bunds yielding 2.85% and UK gilts at 4.498%.

Individual Stock Moves Amid Sector Transitions

Beyond the semiconductor makers leading gains, several other names attracted attention. Palantir Technologies advanced over 3% after William Blair upgraded the stock to outperform. Oracle climbed more than 3% on news it plans raising $45 billion to $50 billion through debt and equity offerings to expand cloud infrastructure capacity. Autodesk gained more than 2% following JPMorgan Chase’s upgrade to overweight with a $319 price target.

Negative surprises emerged from Walt Disney declining more than 6% to lead Dow Jones losers after analyst commentary criticized second-quarter guidance as disappointing. IDEXX Laboratories fell more than 3% due to fourth-quarter gross margins coming in at 60.3%, below consensus estimates of 61%. Humana declined more than 2% after Morgan Stanley downgraded the stock to underweight with a $174 price target.

Interest Rate Dynamics Amid Hawkish Fed Leadership Speculation

March 10-year Treasury notes declined two ticks, with yields rising 1.2 basis points to 4.248%. Bond weakness reflected carryover effects from President Trump’s nomination of Kevin Warsh as the next Federal Reserve Chair. Warsh, who served as a Fed Governor from 2006-2011, carries a reputation for hawkish policy preferences and has historically emphasized inflation risks during economic cycles. However, losses in Treasuries remained contained, supported by crude oil’s sharp decline that moderated inflation expectations and proved supportive for fixed-income valuations.

Swaps traders priced only a 1% probability of an ECB rate hike at the central bank’s February 5 policy meeting, suggesting muted expectations for eurozone monetary tightening despite January manufacturing PMI reaching 49.5.

Earnings Season Momentum and Economic Calendar Highlights

Q4 earnings season accelerated with 150 S&P 500 companies scheduled to report this week. Results thus far have validated equity valuations, with 78% of the 167 companies reporting beating consensus earnings expectations. Bloomberg Intelligence estimates Q4 earnings growth will reach 8.4%, while excluding the Magnificent Seven megacap technology stocks, growth moderates to 4.6%.

Traders should monitor several economic releases expected this week. Today saw January ISM manufacturing index expected to reach 48.5. Tuesday brings December JOLTS job openings data anticipated at 7.250 million, +104,000 from prior period. Wednesday will feature January ADP employment change expected at +45,000 and January ISM services index projected at 53.5. Thursday brings weekly initial unemployment claims data expected around 212,000, and Friday concludes with January nonfarm payrolls anticipated at +65,000, January unemployment rate expected unchanged at 4.4%, and average hourly earnings increases projected at +0.3% monthly and +3.6% year-over-year.

The Federal Reserve markets continue pricing a 13% probability of a 25 basis point rate cut at the March 17-18 policy meeting. These expectations reflect uncertainty about inflation trajectory and labor market resilience as makers and other cyclical sectors seek sustainable demand drivers for corporate expansion and capital investment.