S&P 500 rebounds 0.8% as chip stocks rally after last week's selloff

US stocks bounced back Monday as semiconductor shares recovered from their worst session in months, lifting the S&P 500 0.8%.

The S&P 500 rose 0.8% to 7,447 as chip stocks rebounded from a selloff that erased more than 1,100 points from the Nasdaq Composite on Friday.

"AI tailwinds are fueling an episodic fundamental surge across related sectors, and we have high confidence in continued earnings beats through year-end," Citigroup strategists said, as the bank raised its S&P 500 year-end target to 8,100 from 7,700.

The Nasdaq Composite surged 1.4%, while the Dow Jones Industrial Average added 0.3%. Intel Corp. jumped 11%, Micron Technology Inc. gained 8% and Western Digital Corp. rose 5%, leading a broad recovery in semiconductor names. Optical communication stocks also rallied, with Corning Inc. and Marvell Technology Inc. each climbing 8%. Marvell later extended gains to 9% after S&P Dow Jones Indices announced it would join the S&P 500 on June 22.

The rebound follows a sharp rotation out of semiconductor stocks on Friday that dragged the Nasdaq down more than 1,100 points. Citigroup's revised target implies the S&P 500 has about 9% upside from current levels, with the bank forecasting earnings of $350 per share in 2026 and $400 in 2027 — suggesting future gains will depend on earnings growth rather than valuation expansion.

Citi lifts S&P 500 target to 8,100 on AI earnings momentum

Citigroup's upgrade to 8,100 from 7,700 reflects confidence that artificial intelligence-related earnings will continue to drive index-level gains. The bank expects S&P 500 earnings to reach $350 per share in 2026 and increase to $400 per share in 2027, positioning the current cycle in its "middle innings" where further upside depends more on profit growth than on multiple expansion.

Marvell, Sandisk lead single-stock movers

Marvell Technology jumped 9% after S&P Dow Jones Indices said the chipmaker would join the benchmark index on June 22. The move comes days after Nvidia Corp. Chief Executive Officer Jensen Huang described Marvell as a potential future trillion-dollar company, highlighting its networking and connectivity chips used in AI data centers.

Bank of America raised its price target on Sandisk to $2,100, maintaining a Buy rating. The firm cited strong pricing power as memory supply remains constrained and demand for NAND flash storage rises with AI infrastructure expansion. Sandisk shares rose 4%.

Crude oil added $1.56 to $92.10 per barrel, while the Cboe Volatility Index remained elevated with implied volatility at 21.09%, significantly above historical volatility of 13.22%. Options market data showed put open interest outpacing calls by a ratio of nearly 4-to-1, reflecting lingering hedging demand despite the day's gains.

This article is for informational purposes only and does not constitute investment advice.