Stocks Rally As Oil Prices Tumble; Tech, Chipmakers Lead As Traders Focus On AI Winners Before Earnings Season: What's Driving Markets Tuesday?

After starting the week with a negative session, U.S. markets rebounded on Tuesday, driven by falling oil prices, which helped alleviate concerns about a potential resurgence in inflation.

Crude oil dropped as much as 5% on the day, weighed down by China’s lack of additional fiscal stimulus and a de-escalation in geopolitical tensions between Israel and Iran.

At the same time, Treasury yields paused their recent climb, offering further relief to investors.

Optimism surrounding the upcoming earnings season also buoyed traders, leading to renewed buying in tech stocks and key AI-linked companies. The S&P 500 gained 0.8%, the Nasdaq 100 rallied 1.3% on the back of semiconductor strength, while the Russell 2000 posted a more modest 0.4% rise.

The Magnificent Seven stocks—Microsoft Corp. (NYSE:MSFT), Apple Inc. (NASDAQ:AAPL), NVIDIA Corp. (NASDAQ:NVDA), Alphabet Inc. (NASDAQ:GOOG) (NASDAQ:GOOGL), Amazon Inc. (NASDAQ:AMZN), Meta Platforms Inc. (NASDAQ: