US technology stocks rallied on Monday as semiconductor shares rebounded from last week's sell-off, with investors betting that the sector's investment boom will continue to support corporate earnings. The tech-heavy Nasdaq 100 led the advance, climbing 1.5% to 29,566. The S&P 500 added 0.9% to 7,417, while the Dow Jones Industrial Average rose 236 points, or 0.5%, to 52,112.

Magnificent Seven and Chipmakers Surge

Tesla Inc. jumped 5.8%, Alphabet Inc. gained 3.9%, and Amazon.com Inc. rose 3.7%, while Meta Platforms Inc. advanced 2.5%. Tesla's rally followed a tweet from Elon Musk stating the company was rolling out a new version of its Full Self Driving (FSD) driver-assistance hardware to owners with AI3 hardware. Chipmakers were a significant source of gains, with the iShares Semiconductor ETF rallying 2.8%, partially recovering from a 5.9% drop on Friday. Astera Labs Inc., Applied Materials Inc., and KLA Corp. were the top gainers in the sector, rising 14%, 12%, and 9%, respectively.

Space Stocks Rally on M&A News

The biggest mover within the Russell 1000 was Iridium Communications Inc., which soared 22.3% after Rocket Lab Corp. agreed to acquire the satellite operator for roughly $8 billion. The deal offers $54 per share in cash and stock to secure Iridium's L-band spectrum. This acquisition ignited the broader space sector, with AST SpaceMobile Inc. jumping 15.6%, further boosted by news that its BlueBird 8, 9, and 10 satellites are now operational in orbit.

Market Performance and Sector Movers

Consumer discretionary led sector performance, driven by Amazon and Tesla, while communication services and technology sectors also gained. Roblox Corp. rallied 14.6% after an upgrade from Arete Research. Conversely, TopBuild Corp. fell 13.6% amid concerns over its pending merger with QXO, and Verizon Communications Inc. dropped 6.6% following its removal from the Dow Jones Industrial Average.

Major Indices Performance

Data updated by 12:20 p.m. ET.

Russell 1000 Top Gainers

Russell 1000 Top Losers

The spread between the Nasdaq-100 Volatility Index (VXN) and the CBOE Volatility Index (VIX) has widened to 12 points, the largest gap in at least 23 years, according to Bloomberg data highlighted by The Kobeissi Letter. This divergence has more than tripled since the start of May as technology-stock volatility has accelerated far faster than volatility across the broader market. The move suggests investors are pricing significantly more uncertainty into AI-heavy technology stocks than into the S&P 500, tracked by the SPDR S&P 500 ETF Trust (NYSE: SPY), and the broader market benchmark reflected in the Invesco QQQ Trust (NASDAQ: QQQ).

Since the beginning of May, the VXN has climbed roughly 43%, or about nine points, while the VIX has risen just 9%, or approximately two points. That widening gap is notable because previous market shocks — including the 2008 financial crisis and the COVID-19 pandemic — produced peak spreads of roughly 7 and 11 points, respectively. The current 12-point spread now exceeds both. Rather than signaling broad market panic, however, the divergence suggests investors are assigning a much larger risk premium specifically to technology stocks, particularly those concentrated in QQQ relative to the broader SPY benchmark.

Tech Volatility vs. Broader Market

The Nasdaq-100, tracked by QQQ, is heavily weighted toward artificial intelligence beneficiaries, including NVIDIA Corp., Microsoft Corp., Apple Inc., Amazon.com Inc., Alphabet Inc., Meta Platforms Inc. and Broadcom Inc. Those companies have led the market higher over the past two years, helping lift both QQQ and, to a lesser extent, SPY, fueled by hundreds of billions of dollars in AI infrastructure spending. At the same time, investors continue to debate when those investments will translate into meaningful revenue growth, leaving valuations increasingly sensitive to earnings, guidance and AI adoption trends.

That uncertainty appears to be showing up in options markets, where traders are demanding significantly higher premiums to hedge technology exposure than the broader market represented by SPY. Historically, rising implied volatility has often been associated with investor caution. But elevated volatility can also accompany periods of strong market leadership, particularly when expectations are high and investors anticipate larger price swings around earnings, product launches or macroeconomic developments.

For long-term investors, the record VXN-VIX spread may therefore say less about the direction of the market and more about the concentration of expectations surrounding Big Tech and its outsized influence on QQQ versus SPY. The message from options markets is clear: Wall Street still believes technology will drive the market — but it also expects the ride to be considerably bumpier than it has for the broader S&P 500.