S&P 500, Nasdaq recover half of Monday’s fall ahead of big tech results, Fed decision

S&P 500, Nasdaq recover half of Monday’s fall ahead of big tech results, Fed decision

Benchmark indices on Wall Street recovered some of the lost ground on Monday as retail chose to buy the dip during a chaotic start to an earnings heavy week.

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The Dow Jones advanced over 130 points on Tuesday, gaining in six out of the last seven trading sessions. The S&P 500 and Nasdaq gained 0.9% and 2% respectively, recovering at least half of what they lost on Monday.

Shares of Nvidia, which fell 17% on Monday, wiping out nearly $600 billion from its market capitalisation, saw a 9% rebound, as did most of the other semiconductor-linked ETFs. Microsoft is in talks to acquire the US arm of TikTok, according to President Donald Trump, leading to the stock surging nearly 3%.

A punishing selloff in technology stocks on Monday spelled opportunity for dip-buyers prowling in the $11 trillion ETF arena.

As the Invesco QQQ Trust Series 1 (ticker QQQ) sank nearly 3% on Monday — spooked by Chinese startup DeepSeek’s AI progress — investors poured $4.3 billion into the tech-heavy fund — its biggest one-day haul since 2021. The same impulse drove a record $1 billion into the GraniteShares 2x Long NVDA Daily ETF (NVDL), and almost $1.3 billion into the Direxion Daily Semiconductors Bull 3x Shares (SOXL), Bloomberg data show, despite double-digit plunges in both funds.

“Was it a bit unnerving? Yes, for some. Should you panic? Not at all,” said Kenny Polcari at SlateStone Wealth. “If you talk to anyone that bought stock yesterday, they loved the opportunity to buy some of these names at a deep discount. In the end, no matter how this plays out, competition is good. And remember, you get what you pay for.”

A key test for AI bulls will be the start of the big-tech earnings season, with Microsoft, Meta Platforms Inc. and Tesla Inc. reporting Wednesday. While profits from the Magnificent Seven behemoths are still rising — and far outpacing the rest of the market — growth is projected to come in at the slowest pace in almost two years.

As the Fed’s two-day meeting began, investors have accepted that officials probably won’t be cutting rates this time. But they’re looking for any signal from Chair Jerome Powell on which way inflation is going. A survey conducted by 22V Research shows 67% of respondents expect the reaction to the Fed Wednesday to be “mixed/negligible,” 21% said “risk-off” and 12% “risk-on.”

“Markets are not expecting a cut and will focus on what the Fed projects for the rest of 2025,” said Bowersock Hill. “Both inflation and interest rates are going to remain higher for longer – we would not be surprised to see one rate cut in 2025, or even none.”

The yield on 10-year Treasuries was little changed at 4.54%. The Bloomberg Dollar Spot Index rose 0.3%.

(With Inputs From Agencies.)

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