Major U.S. stock indices closed sharply higher, with technology stocks leading the rebound. The Nasdaq 100 erased all of Wednesday’s losses, while the S&P 500 also recovered its decline from the prior session. The Dow Jones Industrial Average rebounded by more than 600 points, clawing back over half of Wednesday’s roughly 1,100-point slide. The strong recovery suggests buyers were willing to step back into risk assets after yesterday’s broad-based selloff.
One of the day’s biggest stories came from the hedge fund world. Citadel agreed to purchase the public equity portfolio of AI-focused hedge fund Situational Awareness after the fund suffered steep losses on leveraged AI bets. The episode is a reminder of how quickly leverage can turn a market correction into a liquidity crisis, forcing funds to liquidate positions regardless of their long-term conviction. At the same time, it also highlights how firms with deep pockets can use periods of forced selling to acquire assets they view as undervalued.
Was today’s rally partly fueled by that transaction? It is certainly possible. Reports indicate Situational Awareness had significant leveraged positions in Nebius Group, Sandisk, and Bloom Energy—and those three stocks were among the strongest performers in today’s AI and semiconductor rebound. If the forced selling has largely run its course, today’s price action may have reflected buyers stepping in once that overhang was removed.
The rebound in AI and chip-related shares was impressive. More than a dozen names gained double digits, led by:
- Nebius Group (NBIS): +27.13%
- Bloom Energy (BE): +26.49%
- Sandisk (SNDK): +25.97%
- CrowdStrike (CRWD): +21.51%
- Astera Labs (ALAB): +20.00%
- Micron (MU): +18.32%
- Lam Research (LRCX): +17.98%
- Skyworks Solutions (SKHY): +17.52%
- Lite-On Technology (LITE): +15.09%
- Applied Materials (AMAT): +14.97%
- Credo Technology (CRDO): +13.32%
- AMD: +13.00%
- Marvell Technology (MRVL): +12.18%
- Coherent (COHR): +12.16%
- Intel (INTC): +11.41%
- GE Vernova (GEV): +9.07%
- Arista Networks (ANET): +8.26%
- Taiwan Semiconductor (TSM): +7.64%
- Arm Holdings (ARM): +7.40%
The gains helped drive the broader market higher:
- Dow Jones Industrial Average: 52,213.21, +614.08 points (+1.19%)
- S&P 500: 7,437.64, +121.48 points (+1.66%)
- NYSE Composite: 25,122.18, +679.24 points (+2.78%)
- Russell 2000: 2,946.10, +39.79 points (+1.37%)
- Nasdaq 100: 28,106.35, +914.04 points (+3.36%)
After the closing bell, earnings season delivered another positive surprise. Amazon topped expectations, sending its shares up more than 13% in after-hours trading. Apple is scheduled to report shortly, setting the stage for another potentially market-moving event to cap off an eventful day.
This article was written by Greg Michalowski at investinglive.com.