Wall Street rebounds strongly, driven by Broadcom and easing US-China tensions
The New York Stock Exchange had a spectacular session on Monday, October 13, erasing the losses incurred at the end of the previous week. The S&P 500 increased by 1.56% to close at 6,654.72 points, while the Dow Jones Industrial Average rose by 1.29% to 46,067.58 points. The Nasdaq, which is rich in tech stocks, recorded an even more remarkable performance with a rise of about 2.21%. This widespread rebound can be attributed to the combination of two major catalysts: the announcement of a massive strategic agreement between chip manufacturer Broadcom and AI pioneer OpenAI, and a rhetorical shift by Donald Trump on the Chinese trade issue, which alleviated fears of an imminent tariff escalation. Investors thus re-engaged with risk appetite, heavily favoring tech and growth stocks over traditional defensive sectors.
Semiconductor Sector Surges with Broadcom Leading the Way
Broadcom led the charge on Monday with a spectacular rise of 9.88% to $356.70, driven by the announcement of a multi-year partnership with OpenAI. This contract, estimated to be worth tens of billions of dollars according to sources familiar with the matter, outlines Broadcom's role in developing and deploying custom chips and networking equipment to power OpenAI's artificial intelligence infrastructure. The ambitious goal is to reach a computing capacity of 10 gigawatts by the end of 2029, with initial deliveries scheduled for the second half of 2026.
This strategic alliance confirms Broadcom's central position in the AI ecosystem, where the company can now compete with giants like Nvidia thanks to its application-specific integrated circuits (ASICs) and advanced Ethernet technology. The ripple effect across the semiconductor sector was immediate and substantial. ON Semiconductor surged 9.55%, Monolithic Power Systems 8.54%, Microchip Technology 6.59%, while Micron Technology advanced 6.15%. Equipment manufacturers also saw gains, with Lam Research up 4.90% and the Dutch company ASML rising 5.18%.
Qualcomm, NXP Semiconductors, and Skyworks Solutions also enjoyed the windfall, gaining 5.33%, 5.52%, and 6.09% respectively. This collective performance highlights investor enthusiasm for the hardware infrastructure essential to the development of artificial intelligence, a sector expected to maintain exponential growth in the coming years.
Improved US-China Relations Revive Market Optimism
Monday's trading session was also marked by a palpable sense of relief regarding trade relations between Washington and Beijing. After threatening on Friday to impose an additional 100% tariff on Chinese goods in response to Beijing’s export restrictions on rare earth elements, Donald Trump significantly softened his tone over the weekend. On his social media platform, Truth Social, the US President wrote that everything would be fine with China, adding that the United States wanted to help the Asian country rather than harm it.
This diplomatic reversal, combined with similar statements from Vice President JD Vance suggesting the possibility of negotiations if Beijing showed reasonableness, immediately reassured investors. Tesla took advantage of this more favorable environment to climb 5.42%, also supported by several analyst upgrades, including one from Robert W. Baird, which raised its price target to $548. Oracle rose by 5.14%, benefiting from new positive coverage from Baird, which described the company as an 'AI giant'.
Energy stocks related to artificial intelligence infrastructure also shone: GE Vernova, which manufactures turbines and electrical equipment essential for data centers, surged 7.23%, while Vistra Corp., an electricity producer positioned in the AI market, gained 6.45%. Estée Lauder surprised by gaining 5.81%, boosted by a Goldman Sachs upgrade to buy, highlighting the cosmetics group’s strategic renaissance through its partnerships with Amazon and TikTok, as well as stabilization in China.
Defensive Stocks Retreat and Casino Disappointment
Contrary to the tech euphoria, several sectors took a hit on Monday, reflecting a pronounced sector rotation in favor of growth stocks. Fastenal faced the steepest decline, plummeting 7.54% to $42.33 after reporting disappointing quarterly results that fell short of analysts' expectations, highlighting the ongoing struggles of the industrial distributor in a challenging economic environment. Casino operators exposed to Macau also suffered: Las Vegas Sands dropped 6.33%, and Wynn Resorts fell 6.15%.
The consumer staples sector also suffered due to the shift towards tech stocks, with investors moving away from safe havens in favor of riskier assets. General Mills slipped 2.41%, Altria fell 2.39%, Campbell's dropped 1.94%, and McCormick decreased 1.95%. Monster Beverage lost 3.55%, while Conagra Brands declined 2.10%. Arista Networks, despite being active in data center networks, oddly tumbled 4.32%, possibly due to profit-taking after a recent strong rise. Pharmaceutical companies also disappointed, with Eli Lilly down 1.69%, as investors decisively favored technological innovation over defensive stability.
This content has been automatically translated using artificial intelligence. While we strive for accuracy, some nuances may differ from the original French version.
