Market Rebound Gains Momentum as Tech and AI Stocks Surge Past Earlier Weakness

Major stock indexes rebounded today with solid gains across the board, signaling investor confidence in key growth sectors despite earlier headwinds. The S&P 500 Index climbed +0.25%, the Dow Jones Industrials advanced +0.57%, and the Nasdaq 100 surged +0.42%, with March E-mini S&P futures up +0.20% and March E-mini Nasdaq futures gaining +0.34%.

The market’s rebound was primarily driven by a strong recovery in semiconductor makers and AI infrastructure stocks, which bounced back from last Friday’s losses to lead the broader market higher. Simultaneously, U.S. rare-earth stocks surged on news that President Trump plans to establish a strategic stockpile of critical minerals with $12 billion in initial funding, designed to reduce American dependence on Chinese supply chains.

Tech and Semiconductor Sector Leads the Rebound Movement

Chip manufacturers and AI infrastructure companies spearheaded the market’s rebound today. SanDisk led the gainers in the S&P 500, rising more than +7% after CTBC Securities initiated coverage with a buy rating and a $660 price target. Western Digital, Seagate Technology Holdings, and Advanced Micro Devices all climbed more than +3%, while Intel and Lam Research advanced over +2%. This sector rebound reflects renewed investor appetite for technology stocks after recent profit-taking.

The rebound extended beyond semiconductors into the broader AI infrastructure space, as investors reassess valuations following the initial selloff. Multiple analysts noted that the sector’s recovery indicates institutional buying at lower price levels, supporting the sustainability of this upward momentum.

Critical Minerals Sector Gains as Strategic Initiative Unfolds

Capitalizing on President Trump’s announcement of a $12 billion strategic stockpile program for critical minerals, rare-earth stocks experienced notable gains. USA Rare Earth jumped more than +9%, while United States Antimony Corp rose more than +8%. MP Materials and Critical Metals Corp advanced over +4%, with Ramaco Resources gaining more than +1%. This policy-driven rebound in the commodities sector reflects investor confidence in reshoring efforts and reduced China exposure.

Energy Sector Faces Headwinds Amid Easing Geopolitical Tensions

While the overall market rebounded, energy producers faced persistent selling pressure. WTI crude oil plunged more than 4% as geopolitical tensions eased following President Trump’s comments about diplomatic talks with Iran. ConocoPhillips, Diamondback Energy, Occidental Petroleum, APA Corp, and Chevron all declined more than -2%, while Exxon Mobil, Halliburton, Phillips 66, and Valero Energy dropped more than -1%. The energy sector’s weakness partially offset gains from the technology rebound.

Cryptocurrency Stocks Struggle Despite Broader Market Rebound

While equities demonstrated resilience, cryptocurrency-exposed stocks retreated significantly, with Bitcoin declining more than -7% to a 9.75-month low. Current Bitcoin trading shows a price of $66.50K with a 24-hour decline of -2.21%. According to Coinglass, approximately $590 million in long Bitcoin positions were liquidated over the weekend. MicroStrategy, Marathon Digital Holdings, and Galaxy Digital Holdings all fell more than -3%, while Coinbase dropped more than -2%. Notably, Riot Platforms bucked the downtrend and gained +0.39%, providing a contrarian signal amid broader crypto weakness.

Mixed Signals from International Markets and China’s Economic Slowdown

International markets displayed mixed momentum today. Europe’s Euro Stoxx 50 advanced +0.35%, while Asian markets struggled. China’s Shanghai Composite fell to a 4-week low, closing down -2.48% following disappointing economic data. The China January manufacturing PMI unexpectedly declined 0.8 points to 49.3, falling below expectations of 50.1, indicating sector contraction. January non-manufacturing PMI also fell 0.8 points to 49.4, marking the steepest contraction pace in three years and undershooting expectations of 50.3. Japan’s Nikkei Stock 225 retreated from a 2.5-week high to close down -1.25%, reflecting risk-off sentiment from Asian economic weakness.

Signs of China’s economic deceleration present a headwind to global growth prospects, potentially limiting the duration of today’s technology sector rebound if international demand softens further.

Interest Rates and Fixed Income: 10-Year Yields Rise Amid Fed Chair Speculation

March 10-year T-notes declined 2 ticks today as the 10-year yield climbed +1.2 basis points to 4.248%. Bond weakness reflects market repricing following President Trump’s nomination of Keven Warsh as the next Federal Reserve Chair. Market participants view Warsh as holding a more hawkish stance compared to alternative Fed Chair candidates, given his historical emphasis on inflation risks during his 2006-2011 tenure as Fed Governor.

T-note losses remained limited, however, as crude oil’s sharp -4% decline has dampened inflation expectations, providing some support for fixed income valuations. European government bond yields demonstrated mixed movements, with the 10-year German bund yield rising +0.7 basis points to 2.850%, while the 10-year UK gilt yield fell -2.4 basis points to 4.498%.

Individual Stock Spotlights: Winners and Losers in Today’s Session

Beyond the sector-level rebound, specific stocks displayed notable movements. Palantir Technologies surged more than +3% following an upgrade to outperform from market perform by William Blair analysts. Oracle advanced more than +3% after announcing plans to raise $45 billion to $50 billion through combined debt and equity offerings to expand cloud infrastructure capacity. Autodesk gained more than +2% after JPMorgan Chase upgraded the stock to overweight from neutral with a $319 price target.

Conversely, Walt Disney led losers in the Dow Jones Industrials, declining more than -6% after several analysts deemed the company’s Q2 quarterly outlook disappointing. IDEXX Laboratories fell more than -3% after reporting Q4 gross margins of 60.3%, below the 61% consensus estimate. Humana dropped more than -2% following Morgan Stanley’s downgrade to underweight from equal weight with a $174 price target.

U.S. Government Funding Situation: Brief Uncertainty to Resolve Soon

Market sentiment faced headwinds from a partial U.S. government shutdown now in its third day. However, the funding lapse appears temporary, with the House returning from a week-long recess today and potentially voting on a spending deal President Trump negotiated with Democrats as early as today or tomorrow. This temporary uncertainty has weighed on investor sentiment, though resolution is expected imminently.

Earnings Season Strengthens as Companies Beat Expectations

Q4 earnings season remains a positive catalyst for the market rebound. Approximately 150 S&P 500 companies are scheduled to report earnings this week. Of the 167 companies that have already reported results, 78% have beaten analyst expectations, demonstrating resilience in corporate profitability. Bloomberg Intelligence projects Q4 earnings growth will climb +8.4% year-over-year. Excluding the Magnificent Seven megacap technology stocks, Q4 earnings are expected to increase +4.6%, indicating broad-based earnings strength supporting today’s rebound.

Week Ahead: Key Economic Data and Policy Decisions Will Drive Market Direction

This week’s market dynamics will be shaped by tariff developments, earnings announcements, and critical economic indicators. Today, the January ISM manufacturing index is expected to rise +0.6 to 48.5. On Tuesday, December JOLTS job openings are projected to increase by +104,000 to 7.250 million. Wednesday brings January ADP employment change (expected +45,000) and the January ISM services index (expected to decline -0.3 to 53.5). Thursday will feature weekly initial unemployment claims (expected to rise +3,000 to 212,000).

Friday brings the most significant data release: January nonfarm payrolls (expected +65,000), the January unemployment rate (expected unchanged at 4.4%), January average hourly earnings (expected +0.3% month-over-month and +3.6% year-over-year), and the University of Michigan January consumer sentiment index (expected to fall -1.5 to 54.9).

Fed Rate Cut Odds Remain Low Amid Hawkish Leadership Transition

Market expectations for near-term monetary stimulus remain muted. Futures markets are currently discounting only a 13% probability of a -25 basis point rate cut at the next Federal Reserve policy meeting scheduled for March 17-18. The nomination of the hawkish Keven Warsh as potential Fed Chair has reinforced expectations for a more restrictive policy stance, contrasting with market hopes for rate reductions earlier in the cycle.

Swap markets indicate only a 1% probability of a +25 basis point rate hike by the European Central Bank at its February 5 policy meeting, suggesting the ECB maintains its accommodative stance despite European economic data showing mixed signals.

Outlook: Rebound Durability Hinges on Earnings and China Recovery

Today’s market rebound demonstrates renewed investor confidence in growth sectors, particularly semiconductors and AI infrastructure companies. The tech sector’s recovery from Friday’s losses suggests institutional accumulation at lower valuations. However, the rebound’s sustainability will depend on continued earnings strength, potential tariff policies, and critically, signs of stabilization in China’s economic growth trajectory.

The cryptocurrency sector’s persistent weakness and China’s manufacturing contraction present potential drag on the rebound momentum if economic data continues deteriorating. Investors will closely monitor Friday’s nonfarm payrolls data and the trajectory of Treasury yields as key indicators determining whether today’s upside move can extend into the following week.