By Sinéad Carew and Tharuniyaa Lakshmi
Oct 19 (Reuters) - The tech-heavy Nasdaq Composite led Wall Street gains on Monday as investors returned to the chip sector and other AI-related stocks following last week's bruising selloff, while investors waited for key corporate earnings reports.
The benchmark S&P 500 and Nasdaq had posted their biggest weekly drop since late June on Friday, as concerns that higher interest rates could curb investments in AI infrastructure weighed on technology stocks, particularly
data center operators.
The selloff reflected mounting investor unease over how the costly AI build-out will be financed, a question that has increasingly pressured companies underpinning the US bull market, which recently marked its fourth anniversary.
The Philadelphia Semiconductor Index was last up about 2%, putting it on course to snap an eight-day losing streak in which it fell about 15.7% for its longest run of declines since October 2008.
"Rubber bands can only stretch so far in one direction before they snap and start reversing, and you finally saw that enough-is-enough moment in the semiconductors after Friday's close," said Michael James, managing director and equity sales trader at Rosenblatt Securities in Los Angeles.
"Nothing changed between Friday's close and this morning's open, other than nothing bad happened over the weekend, and sentiment had gotten so negative that we were oversold to the point where a bounce was due," James said.
And with a lot of technology company earnings reports due out in coming days and weeks, he cautioned that the market is "far from out of the woods."
This week, Meta, down almost 1% on Monday, is due to report results on Wednesday. Results from Elon Musk-led Tesla are also due that day, while SpaceX is scheduled to report on Tuesday.
At 2:08 p.m. the Dow Jones Industrial Average rose 13.01 points, or 0.03%, to 52,015.42, the S&P 500 gained 40.86 points, or 0.53%, to 7,700.54 and the Nasdaq Composite gained 307.83 points, or 1.18%, to 26,447.86.
Of the S&P 500's 11 major sectors, seven were declining. However, consumer discretionary and technology led the gainers, up 2.7% and 1.4%, respectively.
Boosts to the consumer sector came from companies including Amazon.com, which was up 4.8% after Morgan Stanley named the e-commerce and cloud computing firm as its "top pick." Tesla was another boost to that sector with a 3.7% gain.
CoreWeave was at the center of last week's selloff after its shares plunged more than 25% on worries over a $50 billion debt load. Shares in the cloud computing provider were last down more than 1.5% on Monday as it gave back earlier gains resulting from Goldman Sachs' upgrade of the stock to "buy" from "neutral."
Peers Nebius and Iren were still up 1.5% and 2.9%, respectively, in afternoon trading.
US crude oil reversed earlier losses and was last rallying about 2.3% at nearly $104 a barrel after attacks by Yemen's Iran-aligned Houthis on a Yemeni military training camp and renewed attacks on Saudi energy, airport and military facilities. [O/R]
Intel shares rose close to 3% after J.P. Morgan upgraded the stock to "neutral" from "underweight."
Cleveland-Cliffs surged about 16% after the steelmaker surpassed analysts' estimates for third-quarter profit.
Monday is the 39th anniversary of Black Monday, the 1987 crash that marked the biggest one-day decline in the history of the Dow Jones Industrial Average.
(Reporting by Sinéad Carew in New York, Tharuniyaa Lakshmi and Ragini Mathur in Bengaluru; Editing by Shilpi Majumdar and Mark Porter)
