Chip Stocks and Bitcoin Boost the S&P 500 and Nasdaq to Second Day of Gains

Major stock indexes climbed on Monday, led by a rally in chip stocks, and Bitcoin surged past $100,000 for the first time in nearly three weeks.

The S&P 500 rose 0.6%, and the Nasdaq gained 1.2%, both notching a second consecutive day of advances. The Dow Jones Industrial Average, however, slipped fractionally, closing the day below earlier highs.

Chip Stocks Shine

Chipmakers were the standout performers after strong earnings from Foxconn, a major contract electronics manufacturer, boosted semiconductor stocks.

Micron (MU) led the S&P 500 gainers with a 10.5% surge, followed by gains for ASML Holding (ASML) and KLA Corp. (KLA) of 7.6% and 5.1%, respectively. The VanEck Semiconductor ETF (SMH) also rose 3.3%.

Chip stocks have rallied broadly in recent sessions as demand for semiconductors used in everything from smartphones to data centers remains strong despite supply chain issues and rising inflation.

Among the tech chip heavyweights, Nvidia (NVDA), a key player in the AI chip market, hit a record closing high on Monday, rising 3.4% ahead of a highly anticipated keynote from CEO Jensen Huang at a major trade show in Las Vegas.

Tech Stocks and Bitcoin Boost

The broader technology sector also enjoyed positive momentum. Meta Platforms (META) led with a 4.2% gain, while other tech giants including Apple (AAPL), Microsoft (MSFT), Alphabet (GOOGL), Amazon (AMZN), Tesla (TSLA), and Broadcom (AVGO) also posted gains.

Other notable moves included a 9.4% surge in server maker Super Micro Computer (SMCI), following a 10% jump in the previous session.

Microsoft's announcement that it would spend $80 billion on data centers to support AI further fueled sentiment, as Supermicro's advanced servers rely on Nvidia's graphics processing units (GPUs).

Among the "meme" stocks, AMC soared 22% after the movie theater chain announced a new preferred equity unit.

Bitcoin and MicroStrategy Soared

Shares of MicroStrategy (MSTR), one of the largest corporate holders of Bitcoin, soared nearly 12% on Monday.

The company announced it had purchased more Bitcoin for the ninth consecutive week and planned to raise capital through a share offering to strengthen its balance sheet and fund further Bitcoin purchases.

Bitcoin rose to $102,100, climbing from a low of around $98,000 earlier in the day. The digital currency has gained approximately 45% since the election, fuelled by optimism that a pro-crypto administration could introduce favourable policies for the asset class.

After hitting a record high of over $110,000 in late March, Bitcoin plunged to a low of around $98,000 in recent weeks amid a broader sell-off in risk assets over concerns about rising inflation and the Federal Reserve's plans to raise interest rates.

Theڡdigital currency's gains this year come despite a broader sell-off in risk assets over concerns about rising inflation and the Federal Reserve's plans to raise interest rates.

Bitcoin's gains were capped on Monday by a bearish technical signal, known as a "death cross," which occurred when the 50-day moving average fell below the 200-day moving average. Some traders use this pattern to predict a downtrend in the asset's price.

Treasury Yields and Commodity Movements

The yield on 10-year Treasuries rose slightly to 4.62%, from 4.60% at the end of last week, as investors now await Friday’s December jobs report.

The data will be closely watched for any signs of strength in the labour market recovery, which could provide clues about the Federal Reserve's next move on interest rates.

In commodities, gold futures dipped 0.3% to about $2,650 an ounce, while WTI crude oil futures fell 0.7%.