U.S. and Canadian stocks ended higher on Tuesday, with Nvidia and other artificial intelligence-linked technology shares recovering from sharp losses the previous day as investors snapped up bargains.
The Nasdaq jumped 2% and AI chip leader Nvidia rose 8.9%, a day after its 17% drop erased about US$593 billion from its market value in the biggest single-session loss for any company.
The S&P 500 technology sector rallied 3.6% in its biggest daily percentage gain since July 31, while an index of semiconductor shares gained 1.1%.
Apple shares rose 3.7%. Investors were eager to hear from Apple, Microsoft and other companies when they report quarterly results later this week.
The tech sell-off followed Chinese startup DeepSeek’s launch of AI models it said were on a par or better than industry-leading U.S. rivals at a fraction of the cost.
“We’re getting the typical bounceback rally you’d expect when you have news that’s not very specific and more of a potential for a future change,” said Rick Meckler, partner, Cherry Lane Investments, a family investment office in New Vernon, New Jersey. “Some of the tech market, particularly around AI, was ready for a bit of a sell-off, and this news provided the excuse for it. [On Tuesday] you’re seeing the bargain hunters come back in and also those who are discounting the news about DeepSeek since we don’t really know very much about it.”
Nvidia’s forward price-to-earnings ratio, a common valuation metric, had hit its cheapest since December 2023. Optimism over AI helped to drive sharp gains in Nvidia and the stock market for much of the last two years.
The Dow Jones Industrial Average rose 136.77 points, or 0.31%, to 44,850.35, the S&P 500 gained 55.42 points, or 0.92%, to 6,067.70 and the Nasdaq Composite gained 391.75 points, or 2.03%, to 19,733.59.
In Canada, Shopify led a rally in technology shares, recouping the previous day’s sharp declines.
The S&P/TSX composite index ended up 130.30 points, or 0.5%, at 25,419.45, after posting on Monday its first daily decline in two weeks.
The Toronto market’s technology sector jumped 4.4% after falling 3.4% on Monday. Electronics firm Celestica was up 8.2% after leading Monday’s selloff with a decline of 28%. E-commerce firm Shopify added 9.6%.
Heavily weighted financials rose 0.3% but the energy group was a drag, falling 1%. The price of oil settled 0.8% higher at US$73.77 a barrel after hitting a multi-week low on Monday.
The materials group ended up 0.1% as higher gold prices boosted gold mining shares, offsetting declines for copper, steel and forest product producers.
Fourth-quarter 2024 U.S. earnings season is in full swing, with shares of Royal Caribbean rallying 12% after the cruise operator forecast annual profit largely above expectations.
Boeing shares ended up 1.5%, though it reported its biggest annual loss since 2020. General Motors shares fell 8.9% following its results and outlook, with investors weighing the threat of tariffs that could hit the automaker’s business.
U.S. President Donald Trump said late on Monday he plans to impose tariffs on imported computer chips, pharmaceuticals and steel.
On Wednesday, the Federal Reserve is widely expected to hold its lending rate steady in its first interest-rate decision of the year, while the Bank of Canada is expected to cut its overnight rate by a further 25 basis points.
Declining issues outnumbered advancers by a 1.13-to-1 ratio on the NYSE. There were 165 new highs and 46 new lows on the NYSE. On the Nasdaq, 2,188 stocks rose and 2,216 fell as declining issues outnumbered advancers by a 1.01-to-1 ratio. Volume on U.S. exchanges was 13.87 billion shares, compared with the roughly 15.5 billion average for the full session over the last 20 trading days.
Reuters, Globe staff