Stocks post best day since April as Nvidia falls on CEO probe; SOXX tops SMH

Nvidia fell 4.3% on Monday after its board opened an independent investigation into reports that CEO Jensen Huang was the target of a Chinese intelligence effort. The rest of the chip sector rallied anyway, and that split the two largest semiconductor ETFs. The iShares Semiconductor ETF (SOXX), which caps its largest positions, rose 7.5%. The VanEck Semiconductor ETF (SMH), which holds about a fifth of its assets in Nvidia, rose 5.1%.

The broader market had its best day since April. The S&P 500 rose 2.3% and now sits 3.4% below its record close set last month. The Dow Jones Industrial Average gained 1,104 points, or 2.2%, and the Nasdaq Composite climbed 2.7% lifting it out of correction territory. It was the first session since April 5 in which all three gained at least 2%.

The split came on a rebound from Thursday, Nov. 5, when the Invesco QQQ Trust, Series 1 QQQ, which tracks the Nasdaq-100, fell 6.5% and the State Street SPDR S&P 500 ETF SPY fell 4.4%. On Monday the S&P 500 rose 2.4%. So did SPY. The Dow Jones Industrial Average added 1,104 points, or 2.2%. The Nasdaq Composite, which is broader than the Nasdaq-100, rose 2.7%. The Russell 2000 rose 3.1%.

Monday's gain left SPY 0.1% above its close last Monday, Nov. 2. QQQ rose 3.5% and is still down 0.3% from that close.

All 11 of State Street's sector funds finished higher, led by the State Street Industrial Select Sector SPDR ETF XLI, up 3.8%.

Semiconductor funds and Nvidia

Nvidia closed at $178.67. down 11.6% Its board said Sunday that a committee of independent directors, assisted by outside counsel, will investigate reports that Huang had been “the target of a foreign intelligence effort.” The New York Timesreported that U.S. authorities concluded Alice Huang, a former executive at Singapore-based Megaspeed who is not related to Jensen Huang, was a Chinese intelligence asset.

Nvidia's The board said it has confidence in Huang, that he supports the review, and that it has no reason to believe national security or Nvidia secrets were compromised. China’s Foreign Ministry dismissed the allegations Monday as a smear. Nvidia reports fiscal third-quarter results Nov. 17.

Advanced Micro Devices rose 13.3%. CNBC reported that Oppenheimer upgraded the shares to outperform from market perform and set a $600 price target after a strong third quarter. Investor's Business Daily reported that AMD said its fifth-generation Epyc processors will power artificial-intelligence systems at Google Cloud, and that the stock rose on the news.

VanEck's fund holds 20.7% of its assets in Nvidia, against 8.4% in the iShares fund. That extra stake cost VanEck's fund half a percentage point of return versus the iShares fund on Monday. AMD ran the other way. It is 9.5% of the iShares fund and 5.4% of VanEck's, a difference that added half a percentage point to the iShares fund's return versus VanEck's.

Oil fell, and yields rose

WTI crude, the U.S. benchmark, was last at $86.37 a barrel, down 4.9% from Friday's settle. Brent, the international benchmark, was last at $92.11, down 6.3%. President Donald Trump told CNN on Sunday that fresh attacks on Iran were "highly unlikely" to be necessary if the two sides signed "a very strong agreement," Reuters reported.

Energy shares rose even as oil fell. The State Street Energy Select Sector SPDR ETF XLE gained 0.6%.

Cheaper oil usually takes some pressure off inflation, and short-term Treasury yields usually ease when that happens. They did not. The two-year yield rose 5 basis points to 4.56%. The 10-year yield rose 2 basis points to 4.88%. The 30-year yield was unchanged at 5.26%.

As of Friday, Reuters reported that Federal Reserve policymakers were considering a rate hike after the jobs report, and that traders were pricing about an 80% chance of a quarter-point increase at the Dec. 8-9 meeting, up from about 67% on Thursday. The question in front of the Fed is a higher rate, not a lower one. Employers added 165,000 jobs in October, the Bureau of Labor Statistics, or BLS, said Friday, and unemployment was little changed at 4.1%. Economists had expected 59,000 jobs, CNBC reported. The Fed's target range is 3.75% to 4%, where it left rates on Oct. 28.

The BLS publishes the October consumer price index at 8:30 a.m. Eastern time on Tuesday.