NEW YORK, Nov 9 (Reuters) - US stocks rallied on Monday, as a drop in oil prices tempered inflation fears and helped the S&P 500 bounce off its biggest weekly drop since April 2025, and tech shares jumped even as AI heavyweight Nvidia slumped with controversy swirling around CEO Jensen Huang.
Last week, stocks slumped after a sweeping victory by Democrats in the US midterm elections fed concerns that new regulations could dent the durability of the AI trade.
Each of the 11 major S&P 500 sector indexes rose on Monday. Industrials (.SPLRCI), and consumer discretionary (.SPLRCD), were the top performers, rising more than 3%.
NVIDIA FALLS DESPITE BROADER GAINS
Markets were in rally mode even as Nvidia (NVDA.O), , the second most valuable company in the world, tumbled about 6% and hit its lowest intraday level since March 31, on questions about CEO Huang's future at the AI chipmaker, after an internal investigation into whether a foreign intelligence effort had targeted him.
"The AI story is not going away if people are worried about that, the Democrats are not going to destroy AI. They can't. It's got a life of its own. They can put regulation around it, but they're certainly not stopping it," said Ken Polcari, partner and chief market strategist at SlateStone Wealth in Jupiter, Florida.
Providing further support was a sharp drop in crude oil prices that helped dampen concerns about price pressures, as US President Donald Trump downplayed the likelihood of renewed strikes on Iran.
"Oil prices for sure, if they're down 4%, that's certainly adding fuel to the fire," said Polcari.
The Dow Jones Industrial Average (.DJI), rose 1,131.81 points, or 2.21%, to 52,417.54, the S&P 500 (.SPX), gained 177.81 points, or 2.41%, to 7,554.67 and the Nasdaq Composite (.IXIC), gained 656.06 points, or 2.67%, to 25,235.49. The S&P was on track for its biggest daily percentage gain since April 8 while the Nasdaq was on pace for its best day since July 30.
Inflation readings are on the docket this week as the Labor Department will release its Consumer Price Index report for October on Tuesday and Producer Price Index on Friday.
ANALYSTS SEE OVERREACTION
Some analysts on Wall Street also viewed last week's decline as an overreaction. Morgan Stanley and UBS said last week's rout in AI stocks was overdone, and the risks of extreme regulation of data center developments under a Democratic-controlled Congress were unlikely to play out.
But there are other challenges. Fears of a December rate hike persisted following October's stronger-than-expected jobs data.
Chipmakers surged. The Philadelphia Semiconductor Index (.SOX), rose more than 6% after plunging more than 12% last week, its biggest weekly drop since the week ended April 4, 2025. Nvidia was the sole decliner in the index, while Broadcom (AVGO.O), was up nearly 9%, and Advanced Micro Devices (AMD.O), surged about 13% as the two biggest boosts.
Shares of investment giant KKR advanced 1.9% after its quarterly profit hit a record high. Constellation Energy (CEG.O), , an energy firm with exposure to the AI buildout, shot up more than 10% after its adjusted third-quarter profit surpassed expectations.
Berkshire Hathaway's class A shares gained 0.6% after the conglomerate reported lower third-quarter profit.
Advancing issues outnumbered decliners by a 4.46-to-1 ratio on the NYSE, and by a 3.56-to-1 ratio on the Nasdaq.
The S&P 500 posted 13 new 52-week highs and three new lows, while the Nasdaq Composite recorded 73 new highs and 135 new lows.
Reporting by Chuck Mikolajczak; additional reporting by Niket Nishant and Utkarsh Hathi in Bengaluru; Editing by Shinjini Ganguli, Devika Syamnath and David Gregorio
