The PHLX Semiconductor Index climbed 5.5% Monday as falling oil prices revived risk appetite and sent money back into AI and chip names.
Rate futures now show a 43% chance the Fed does not raise rates through end-2026, up from 29% a week ago, while the 10-year yield slipped to 4.468% and the dollar weakened.
Nvidia rose 3.54%, Micron nearly 11% and Sandisk 6.45%, helped by lower Brent forecasts from Goldman Sachs and Morgan Stanley as hopes for a workable Iran deal eased supply-driven inflation fears.
The rally still looked narrow: breadth was only 51% positive, small-caps closed at their lows, and leadership stayed concentrated in 30 to 50 megacap names rather than spreading to rate-sensitive sectors.
Wednesday's Fed meeting is the next test, with markets pricing a 98.6% chance of no rate change and focusing instead on Kevin Warsh's tone, the dot plot and the risk of a hawkish surprise.