Tech Rebound Eases AI Fears as Markets Stabilize

Stocks rebounded after Monday’s AI-driven selloff, with technology shares leading gains as investors reassessed disruption risks and positioned ahead of key catalysts. A steadier tone in consumer confidence and calmer messaging from AI developers helped sentiment, while Treasury yields and the dollar were little changed. Commodities were mixed, with gold retreating as risk appetite improved.

Key Headlines & Market Movers:

• AI Rebound Lifts Tech and Semiconductors: Beaten-down software and chip names recovered as investors tempered fears that new AI tools would rapidly displace existing business models. Advanced Micro Devices Inc. jumped after securing a multibillion-dollar AI infrastructure deal with Meta Platforms Inc., while traders looked ahead to results from Nvidia Corp. as a key test of AI demand durability.
• Tariff Uncertainty Lingers Despite Market Bounce: Markets continued to digest shifting trade policy signals after President Donald Trump outlined new global tariff increases following a court setback to prior measures. While equities stabilized, the fluid policy backdrop remains a source of headline risk for multinationals, supply chains, and inflation expectations.

Earnings and Corporate Developments Drive Dispersion: Home Depot Inc. topped key sales expectations, signaling resilient consumer spending, while capital allocation concerns weighed on select industrial names. In AI-exposed software, prior sharp declines in companies such as International Business Machines Corp. began to retrace as investors differentiated between disruption risk and long-term adoption opportunities.

S&P 500 Sector Performance

Looking Ahead

All eyes turn to Nvidia’s earnings and upcoming policy signals from Washington, including the State of the Union, for clarity on AI investment momentum and trade strategy. Markets are likely to remain sensitive to guidance on capital spending, demand visibility, and tariff implementation, with positioning suggesting investors are seeking confirmation that the AI growth narrative remains intact without reigniting valuation excesses.

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