Traders work on the floor of the New York Stock Exchange during morning trading on May 31, 2024.
Michael M. Santiago | Getty Images
A rebound in Nvidia shares led the S&P 500 and Nasdaq Composite higher on Tuesday, a day after a sell-off in the chipmaking giant.
The broad market S&P 500 added 0.39% to close at 5,469.30, while the Nasdaq advanced 1.26% and ended at 17,717.65. Both indexes ended three days of declines. The Dow Jones Industrial Average lagged, losing 299.05 points, or 0.76%, closing at 39,112.16.
Nvidia shares gained about 6.7%. During the previous session, the stock dropped more than 6% to mark its biggest one-day slide since April 19, when it lost 10%.
Several large-cap tech names also bounced after suffering declines on Monday. Meta Platforms and Alphabet advanced more than 2% each.
Tuesday’s action marked a reversal from the previous session. On Monday, Nvidia’s decline weighed on fellow artificial intelligence beneficiaries Super Micro Computer and Qualcomm, and the Nasdaq closed lower by more than 1% for its worst day since April.
As investors rotated away from chips Monday, they turned toward banks and energy plays. This intermarket shift led to the Dow closing higher by more than 260 points.
The recent pullback in Nvidia and other tech names is likely a short-term correction, according to Chris Zaccarelli, chief investment officer at Independent Advisor Alliance.
“Tech is again leading the way, and Nvidia is being bought off the dip,” he said. “This year is still all about tech and AI — maybe a little bit of profit taking over the last few days. Clearly valuations are pretty high. But the AI rally has a lot more substance than the dot-com bubble. All the stocks doing well have strong earnings.”
The investor remains confident that the bull market will continue heading into the fall, noting that “AI has replaced rate cuts in terms of kind of keeping the bull market moving forward.”
Meanwhile, SolarEdge Technologies sank nearly 21% after announcing plans for a $300 million private offering of convertible notes. Pool Corp. also dropped 8% after adjusting its guidance downward.
