U.S. equities posted gains Tuesday as investors absorbed a volatile week marked by a steep correction in artificial intelligence-related stocks. The S&P 500 rose 1.4%, while the Nasdaq Composite climbed 1.9%, reversing losses from the prior five trading sessions. Tech giants including Nvidia, Microsoft, and Alphabet led the recovery, with Nvidia up 4.2% following a 9.8% drop last week.
- S&P 500 gained 1.4% to close at 5,378.42, Nasdaq Composite rose 1.9% to 17,243.69
- Nvidia climbed 4.2% after a 9.8% drop the prior week
- Microsoft and Alphabet rose 2.3% and 2.7% respectively
- CBOE VIX fell 15% from recent highs
- 78% of S&P 500 firms issued cautious Q4 outlooks
- 10-year Treasury yield stable at 4.25%
Stocks found renewed strength Tuesday amid a broad-based rebound following a punishing week for artificial intelligence-driven equities. After a sharp selloff that erased more than $1.2 trillion in market value across AI-focused names, major indices reversed course, with the S&P 500 closing at 5,378.42 and the Nasdaq Composite ending at 17,243.69. The correction had been fueled by growing concerns over valuation, margin pressures, and slowing momentum in generative AI adoption, particularly in enterprise software and semiconductor demand. The rally was driven primarily by large-cap technology companies that had been hardest hit. Nvidia, the benchmark for AI infrastructure, rebounded 4.2% after shedding 9.8% in the previous week. Microsoft and Alphabet both posted gains of 2.3% and 2.7%, respectively, as investors reassessed their long-term growth prospects amid supply chain stabilization and renewed confidence in cloud revenue growth. The Russell 2000 index also advanced 1.1%, reflecting broader market optimism beyond the tech sector. Market analysts pointed to a relief rally triggered by reduced fear of a sector-wide overvaluation. The CBOE Volatility Index (VIX) dropped 15% from its recent peak, signaling a decline in investor anxiety. Despite the rebound, concerns remain around earnings guidance for Q4, with 78% of S&P 500 companies having issued cautious outlooks through mid-December. The yield on the 10-year U.S. Treasury note held steady at 4.25%, indicating that fixed income markets remained cautious on inflation trends.