Tech share prices recovered much of the sharp losses from the previous week on Monday, though Nvidia shares plunged more than eight percent in early trading. The decline came amid a probe into Nvidia boss Jensen Huang over allegations of an affair with an alleged Chinese spy, which had sent shockwaves through markets following last Tuesday's US midterm elections that saw Democrats sweep both chambers of Congress.
Oil prices fell five percent on Monday, buoyed by hopes for diplomatic talks aimed at ending the US-Iran conflict. The drop in crude was one factor supporting the broader market rebound, but analysts noted that equities had staged a stronger recovery than just the oil slide alone.
The Nasdaq Composite added 0.9 percent to open higher, while the Philadelphia Semiconductor Index rose 1.9 percent, reflecting renewed investor interest in chipmakers and AI-linked companies after days of heavy selling. Wall Street's main indices opened higher across the board, though gains were tempered by Nvidia's steep decline.
Briefing.com analyst Patrick O'Hare explained that the equity rebound was driven not only by falling oil prices but also by a broader inclination to buy into weakness from last week's broad sell-off, particularly into the large losses seen in the AI trade.
"What we also have this morning is an inclination to buy into last week's weakness, and specifically into the large losses seen in the AI trade," O'Hare said in a note to clients.
Nvidia's shares were being treated as a one-off story by investors, according to O'Hare, who noted that the stock was being penalized for Huang's personal transgression rather than for systemic concerns about the company's fundamentals.
"In other words, the stock is being penalized for Jensen Huang's personal transgression, which has invited a great deal of uncertainty into the mix, but the market isn't caught up in the notion that this situation is going to have a systemic domino effect," he said.
The investigation into whether Huang had been targeted in a foreign espionage plot, following his admission of infidelity, introduced fresh uncertainty into markets. The New York Times reported last month that US intelligence officials concluded a Chinese executive linked to a Singapore-based data centre company called Megaspeed had been funneling information to Beijing.
That executive, Alice Huang — also known as Huang Le — developed a close relationship with Nvidia's boss, according to the report. She is not related to Jensen Huang, who is 63 years old and born in Taiwan.
On Sunday, Huang released a message to company employees acknowledging the affair and apologizing to his family and staff. Nvidia, a global leader in producing chips used to train and run artificial intelligence models, became the first company to reach a market capitalization of $5 trillion last year.
Technology analyst Dan Ives at Yorkville Ives warned that the crisis would at least spark congressional inquiries and create an overhang on the stock for a myriad of reasons.
"This will add risk to the stock as he is so important to the Nvidia story and strategy globally," Ives said.
"This will also increase major scrutiny regarding selling chips to China, which remains a key battleground issue in DC," he added.
China responded on Monday by calling the espionage claims against Huang "baseless."
European markets rose in afternoon trading following gains across Asia. The dollar weakened against its main rivals, while the pound strengthened against the dollar.
At around 1430 GMT, the Dow was up 1.1 percent at 51,858.65 points, the S&P; 500 gained 0.8 percent at 7,438.80, and the Nasdaq Composite rose 0.9 percent at 24,792.85. In London, the FTSE 100 climbed 0.7 percent at 10,742.85, in Paris the CAC 40 gained 1.1 percent at 8,225.88, and in Frankfurt the DAX rose 1.2 percent at 26,134.77. Tokyo's Nikkei 225 closed up 2.3 percent at 58,775.50, while Seoul's Kospi fell 0.8 percent at 5,018.85. Hong Kong's Hang Seng Index ended down 0.1 percent at 24,448.95, Shanghai's Composite rose 0.3 percent at 3,660.79.
Brent North Sea crude fell 5.5 percent to $92.90 per barrel, while West Texas Intermediate dropped 4.9 percent to $86.34 per barrel. The euro strengthened against the dollar at $1.1197 from $1.1138, the pound rose against the dollar at $1.3416 from $1.3350, the dollar weakened against yen at 157.95 from 158.46, and the euro strengthened against the pound at 83.44 from 83.43 pence.