U.S. Stocks Get Tech Boost as Bonds Fall on Tariff Signs
Stocks started the week with solid gains as traders snapped up high-flying technology stocks, while signs that President Donald Trump’s tariffs will be more targeted than anticipated dampened appetite for safety. Bonds fell along with gold. The dollar barely moved.
Even data showing a decline in U.S. factory activity didn’t curb Wall Street’s risk-on bids. Tesla Inc. led gains in megacaps, following a selloff that put the “Magnificent Seven” giants on track for their worst quarter since 2022. A gauge of chipmakers rose 3% despite news that Jack Ma-backed Ant Group Co. is using Chinese-made semiconductors to develop a technique for training AI models that will cut costs by as much as 20%. That was in stark contrast to January’s rout, fueled by the low-cost Deepseek model.
“Stocks appear to be rallying from oversold levels, and any potential reduction in tariff impact would be a catalyst for the upside,” said Ivan Feinseth at Tigress Financial Partners. “I believe we have seen the worst of the market pullback, although we will continue to see increased volatility early next month based on the outcome of President Trump’s tariffs.” A weaker dollar would boost the earnings outlook for U.S. stocks, potentially reversing the massive rotation that has been underway in global markets since the start of the year, according to Morgan Stanley strategists including Michael Wilson.
“Relative performance versus international developed-market equities could swing back in favor of the U.S.,” they said. “Stronger seasonality, lower interest rates and oversold momentum indicators support our call for a tradeable rally. Finally, Mag 7 earnings revisions appear to be bottoming out, which could also support a rotation back into the U.S.”
The S&P 500 rose 1.6%. The Nasdaq 100 gained 2%. The Dow Jones Industrial Average rose 1.3%. The Magnificent Seven megacap gauge rose 2.9%. The Russell 2000 gained 2%.
Source: Bloomberg
