AI Hots Again, Nasdaq Rebounds
Wall Street rallied again on Tuesday (July 21st) after investors began buying on dips. The gains were primarily driven by semiconductor stocks, which rebounded after experiencing sharp pressure last week.
The rise in chip stocks occurred as the market rediscovered the opportunity that the artificial intelligence, or AI, trend still has room to continue. The main semiconductor sector index rose 4.5%, while the Nasdaq 100 gained 1.5%.
Previously, semiconductor stocks entered a bear market phase after a major sell-off hit the technology sector. However, several market participants believe the pressure on momentum stocks and chips is easing, opening up opportunities for investors to rebuild positions in the AI sector.
UBS believes that most speculative positions in momentum stocks and semiconductors have been largely unwound. Hedge funds are said to have significantly reduced their long positions in the sector, so selling pressure is likely to ease.
However, investors are still awaiting evidence that heavy spending on AI is actually generating strong growth. This week's earnings reports from major technology companies like Tesla and Alphabet will be a major focus for the market.
In terms of market impact, a rebound in chip stocks could provide a positive boost for the Nasdaq and S&P 500 in the short term. However, geopolitical risks, rising oil prices, inflation, and the possibility of higher interest rates from the Fed could still restrain further gains. (arl)
Source: Newsmaker.id
