KEY POINTS
- The S&P 500 gained 0.30% Monday to 7,405.73 while the Nasdaq rallied 0.86% as semiconductor stocks staged a sharp recovery from Friday's 4% tech selloff.
- Intel's 10% surge on a confirmed Google foundry order for more than 3 million AI chips anchored the rebound and validated the broader AI capex cycle.
- Wednesday's May CPI print at 8:30 a.m. ET is the week's defining event, with consensus expecting headline inflation to accelerate to 4.2% year-over-year on energy costs.
The S&P 500 clawed back ground Monday, rising 0.30% to close at 7,405.73, as semiconductor stocks surged off Friday's lows and a fragile ceasefire between Iran and Israel took some of the geopolitical risk premium out of the tape. The Nasdaq Composite climbed 0.86% to 25,929.66 while the Dow lagged, slipping 80 points to 50,786.01 as energy and defensive names gave back gains.
The session told a clear story: traders punished tech indiscriminately on Friday after the blowout May jobs report sent Treasury yields spiking, then spent Monday sorting the winners from the losers. Chips won decisively.
Semis Snap Back Hard
Marvell Technology led the charge, jumping nearly 9% after Nvidia CEO Jensen Huang called it "the next trillion-dollar company" at the company's analyst day last week. The stock got an additional lift from confirmation it will join the S&P 500 on June 22. Micron climbed 7%, Nvidia added 2.3%, and the Philadelphia Semiconductor Index recaptured its 50-day moving average after briefly losing it Friday.
Intel delivered the session's single most important catalyst. Shares surged 10% after The Information reported that Google placed a firm order for more than 3 million tensor processing units to be manufactured on Intel's advanced packaging technology in 2028. Nvidia is also running early trials on Intel's 18A process node for its next-generation Feynman GPU architecture. Morgan Stanley estimates the Google commitment alone could scale to 6 million units across 2027 and 2028.
That order transforms Intel's foundry narrative from aspirational to contractual. At $109.99, the stock is up 179% year-to-date but still trades 15% below its May high of $129.44, suggesting the market is not yet pricing full foundry execution.
The CPI Question
The rebound happened against a backdrop of mounting inflation anxiety. Friday's May employment report showed 172,000 nonfarm payrolls, more than double the 80,000 consensus, and revisions added another 93,000 jobs to March and April. The unemployment rate held at 4.3%, and average hourly earnings rose 3.4% year-over-year. None of that gives the Federal Reserve room to ease.
The 10-year Treasury yield climbed to 4.57% Monday, its highest level in two weeks. The CME FedWatch Tool now prices a 72% probability of at least one rate hike by year-end, up from roughly 50% before Friday's report.
All of which makes Wednesday's CPI release the most consequential data point of the week. The Cleveland Fed's inflation nowcast and Wall Street consensus both point to headline CPI accelerating to roughly 4.2% year-over-year in May, driven by energy prices that remain elevated by the Strait of Hormuz disruption. Core CPI, which strips out food and energy, is expected around 3.1%, essentially unchanged from April.
A hot print would cement rate-hike expectations and likely reverse Monday's chip rally. A cooler number — anything below 4.0% headline — could extend the rebound toward the S&P 500's record close of 7,609.78 set on June 2. Traders should watch the 7,350 level on the downside, which held as support during Friday's selloff, and the 7,500 level on the upside, which marks the midpoint of last week's range.
