US markets regained some footing on Monday as a powerful rebound in semiconductor stocks helped lift major indices, while easing tensions between Israel and Iran reduced concerns about energy supply disruptions and supported broader market sentiment.

The technology-heavy Nasdaq Composite rose 0.9%, while the S&P 500 added 0.3%. The Dow Jones Industrial Average lagged behind, finishing slightly lower by 0.1% after surrendering earlier gains. The session marked a welcome recovery following Friday's sharp sell-off, which had been triggered by stronger-than-expected US employment data and renewed concerns about interest rates remaining elevated.

The semiconductor sector was the clear standout. Chipmakers tied to the artificial intelligence boom staged a strong comeback after suffering heavy losses at the end of last week. Intel surged nearly 11%, while Micron Technology gained around 10%, recovering a significant portion of Friday's declines.

Intel received an additional boost from reports suggesting that Google and Nvidia may be considering the company as a backup manufacturing partner for advanced chips. The reports helped restore investor confidence and reignited interest in the broader semiconductor space.

Technology stocks led sector gains within the S&P 500, with the information technology sector rising approximately 1.5%. Investor enthusiasm was also reflected in the performance of the iShares Semiconductor ETF, which jumped roughly 6%, highlighting renewed appetite for AI and chip-related investments.

Performance among the market's largest technology companies was mixed. Tesla climbed 4.6%, while Nvidia advanced 1.7%, both recovering from losses exceeding 6% during Friday's session. Apple, however, moved in the opposite direction, falling around 2% despite the start of its annual developer conference.

Marvell Technology also enjoyed a strong rebound, gaining roughly 10% after plunging 17% in the previous session. Investor sentiment was boosted by the announcement that the company will be added to the S&P 500 index before trading begins on June 22, a move that could generate additional demand from passive investment funds that track the benchmark.

Despite Monday's recovery, investors remain mindful of the challenges that triggered last week's sell-off. Strong US employment data reinforced expectations that the Federal Reserve may keep interest rates higher for longer. Treasury yields remain elevated, with the yield on the 10-year US Treasury note settling near 4.56%, maintaining pressure on growth-oriented sectors whose valuations are particularly sensitive to borrowing costs.

However, many analysts argue that the recent weakness in semiconductor stocks should not automatically be viewed as the beginning of a sustained downturn. Strong corporate earnings, improving manufacturing activity, and ongoing investment in artificial intelligence continue to provide support for the sector. From this perspective, the recent pullback may represent a healthy correction within a broader bull market rather than a fundamental shift in trend.

Energy markets also attracted attention during the session. Oil prices initially surged as Israel and Iran exchanged military strikes, raising fears of supply disruptions across the Middle East. Those gains moderated after both sides confirmed a halt to hostilities and calls for an immediate ceasefire gained momentum.

West Texas Intermediate crude settled around $91.40 per barrel, up approximately 1%, while Brent crude rose 1.2% to roughly $94.25 per barrel. Although prices remain elevated, the easing of geopolitical tensions helped calm fears of a more significant energy shock.

Cryptocurrency markets also staged a recovery. Bitcoin rebounded to around $63,500 after briefly falling below $60,000 on Friday for the first time since October 2024. The recovery supported shares of crypto-related companies, with Strategy, Robinhood, MARA, and Coinbase all posting gains ranging from 3% to 12%.

Elsewhere, the US Dollar Index slipped 0.1% to 100.01, while gold futures declined 0.3% as investors rotated back into risk assets.

Market Outlook

Markets are likely to remain cautious in the near term, balancing optimism around the semiconductor sector's rebound against persistent concerns about interest rates and bond yields. Investors will continue to watch whether Monday's recovery can develop into a broader rebound or whether it proves to be a temporary relief rally following Friday's sharp correction.

The semiconductor sector is expected to remain at the centre of market attention, particularly as investors assess the long-term implications of artificial intelligence investment and the improving outlook for companies such as Intel, Micron, and Marvell. Continued strength in this area could provide important support for the Nasdaq and broader technology sector.

At the same time, elevated Treasury yields remain a significant headwind. If economic data continues to point to a resilient US economy, expectations for prolonged higher interest rates could re-emerge and limit upside potential for growth stocks.

Geopolitical developments will also remain in focus. Stable oil prices and continued de-escalation in the Middle East would likely support investor confidence, while any renewed tensions could quickly reignite volatility across equities, commodities, and currencies.

For now, the market appears caught between two powerful forces: enthusiasm for the AI-driven growth story and concerns that higher interest rates may continue to challenge valuations. The balance between those themes is likely to determine market direction in the days ahead.