The S&P 500 and Nasdaq stock indexes closed sharply higher on Monday, driven by strong gains in chipmakers and technology companies linked to artificial intelligence, as investors positioned themselves ahead of an anticipated robust second-quarter earnings season.
Broadcom Inc. led the rally with a 3.7% increase after announcing an extension of its agreement with Apple Inc. through 2031 to develop and supply custom chips. The Philadelphia Semiconductor Index rose 2.2%, recovering from losses over the previous two sessions. The S&P 500’s information technology sector gained 1.3%, reflecting broad investor interest in AI-related stocks.
Despite the overall positive trend in U.S. markets, the Toronto Stock Exchange closed lower by 0.18%, as weakness in the materials and energy sectors weighed on the index. The TSX materials sector declined 2.2%, impacted by falling bullion prices, while the energy sector dipped 1.2% amid lower crude oil prices. This followed OPEC+’s decision to further increase production targets from August, coupled with recovering exports through the Strait of Hormuz, heightening expectations of larger global supply.
Market experts cautioned that the recent rally has been concentrated in select sectors, particularly technology and semiconductors. Jake Dollarhide, CEO of Longbow Asset Management in Tulsa, Oklahoma, described the rally as “very tenuous,” noting the risk posed by potential prolonged higher interest rates set by the Federal Reserve.
South Korea’s SK Hynix Inc. is set to debut on the Nasdaq later this week, aiming to capitalize on strong demand for AI chip stocks. Meanwhile, Microsoft Corp. shares fell nearly 1% after the company announced plans to cut approximately 4,800 jobs, representing about 2.1% of its workforce. Some analysts view these layoffs as a signal that Microsoft is scaling back capital expenditures amid uncertain returns on its investments, which was met with a cautious market response.
Overall, the S&P 500 rose 0.72% to 7,537.43, the Nasdaq climbed 1.12% to 26,121.16, and the Dow Jones Industrial Average increased 0.29% to 53,055.91. However, advancing stocks in the S&P 500 were outnumbered by declining shares by a ratio of about 1.3 to 1. The index has gained roughly 10% in 2026 but remains about 1% below its recent record close in early June.
Economic data released showed the Institute for Supply Management’s non-manufacturing purchasing managers index holding steady at 54 in June, in line with expectations. Upcoming earnings reports from major companies like Delta Air Lines and PepsiCo are also attracting investor attention ahead of the quarterly earnings season.
Trading volume on U.S. stock exchanges was relatively light at 16.8 billion shares, below the 20-session average of 23.4 billion. Market participants are closely watching Federal Reserve policy signals following a recent, cooler-than-expected jobs report and are pricing in about a 25% chance of a rate hike at the Fed’s July 29 meeting. Fed Governor Christopher Waller highlighted the value of forward guidance as a tool to speed the effects of monetary policy under certain conditions, although he cautioned it can sometimes become problematic if misapplied.