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(Bloomberg) — A rally in several technology giants lifted stocks after last week’s artificial-intelligence selloff lured buyers betting the industry’s investment boom will continue to support solid corporate earnings.
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In the final stretch of what’s set to be the best quarter for the S&P 500 in six years, the index halted a five-day losing streak. A gauge of the Magnificent Seven megacaps climbed 2.5%, following a drop driven by valuation concerns. A closely watched measure of chipmakers came under renewed volatility, but trimmed most of a slide that earlier topped 3% and briefly weighed on major benchmarks.
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“The bounce we’re seeing is a welcome development for the bulls,” said Matt Maley at Miller Tabak. “We continue to believe strongly that the action in the tech sector will continue to be the main driver in the stock market.”
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While the industry doesn’t have to keep outperforming in a big way, the sector does have to keep from falling in any significant manner due to its heavy weight on the S&P 500, he added. If the tech sector can avoid a decline of consequence, Maley notes we could see some “nice rotation” within the stock market.
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The stock resurgence has defied skeptics, coming in the face of war, an oil supply shock and inflation jitters. Since bottoming three months ago, the S&P 500 has staged one of the swiftest rebounds this century, gaining 20% from its March 30 low to its June 2 peak — something it has done just three other times since 2000, according to data compiled by Bloomberg.
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Equities rebounded despite a rise in oil, with traders keeping a close eye on the geopolitical front. President Donald Trump said peace talks with Iran are set to resume on Tuesday in Doha, after both sides agreed to halt a series of tit-for-tat attacks over the Strait of Hormuz.
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The renewed attacks served as a reminder of the fragility of the US-Iran truce and of the uphill struggle shipowners face to restore traffic through the Strait of Hormuz, a key transit point for energy supplies. A fifth of the world’s oil and liquefied natural gas supplies was transported through the strait before the war began in late February.
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Meantime, Treasuries barely budged after the US Supreme Court refused to let President Trump immediately fire Federal Reserve Governor Lisa Cook in a case that tested the central bank’s independence from the White House.
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Corporate Highlights:
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- Verizon Communications Inc. and the UK’s BT Group Plc agreed to create a joint venture for their international businesses in a merger that will take the low-margin units off their books and allow the carriers to focus on their home markets.
- Comcast Corp. said it plans to separate its media businesses from its cable-TV and internet operations, spinning off NBCUniversal and Sky into a new publicly traded company in a bid to increase value.
- Rocket Lab Corp. agreed to buy Iridium Communications Inc., a pioneer in satellite telephones, for $54 a share in a cash-and-stock transaction as smaller players in the orbital economy try to catch up with market leader Space X.
- Martin Marietta Materials Inc. agreed to combine with building materials supplier Lhoist North America in a transaction valued at $13.5 billion, including debt.
- Michael Saylor’s Strategy Inc. said it may sell up to $1.25 billion of Bitcoin to bolster its cash reserve and established two repurchase programs of up to $1 billion each for common and preferred shares.
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