Stocks Rebound on Chip Rally as Inflation Data Looms; Market Braces for Rate Hike Odds
US stock markets bounced back Monday after a major tech selloff on Friday, with semiconductor stocks leading gains following strong May jobs growth that sparked inflation concerns and raised Federal Reserve rate hike expectations to 72%.
Market Recovery After Worst Week of the Year
The S&P 500 Index dropped more than 2.6% Friday to end a nine-week win streak after May jobs growth of 172,000 doubled consensus. Treasury yields spiked on fears the economy might be overheating, raising odds of the Federal Reserve hiking rates to fight inflation. However, chip stocks rebounded early Monday, helping fuel gains in the Nasdaq ahead of the opening bell.
Semiconductor Stocks Lead the Rebound
The upward surge was led by two stocks—Marvell Technology (MRVL) and Micron (MU)—that took some of the biggest blows Friday, rising almost 9% and 7%, respectively. Marvell got an additional boost from news it's being added to the S&P 500 Index on June 22. Nvidia (NVDA) climbed 2.3% ahead of the open after the chip giant announced a partnership with South Korea's SK Hynix in a collaboration that Nvidia said will support 'next-generation memory co-development with Nvidia's AI infrastructure roadmap.'
Inflation Data and Rate Hike Expectations
Chances of at least one hike this year were 72% early Monday, according to the CME FedWatch Tool. The weekend featured new flare-ups in the Middle East, while inflation data due later this week could reinforce ideas that expensive crude is spilling into the broader economy. Market participants remain focused on upcoming CPI data as a key driver for Federal Reserve policy decisions.
Market Sentiment and Broader Context
With key CPI inflation data later this week, stocks rebounded Monday on a chip rally after Friday's heavy tech selloff. The rebound reflects cautious optimism despite underlying concerns about persistent inflation pressures and potential monetary tightening.