Chipmakers Lead U.S. Stock Indices Higher on Strong Demand Signals

The S&P 500 Index ($SPX) (SPY) rose 0.48%, the Dow Jones Industrial Average ($DOWI) (DIA) gained 0.26%, and the Nasdaq 100 Index ($IUXX) (QQQ) climbed 1.27%. September E-mini S&P futures (ESU26) increased by 0.49%, while September E-mini Nasdaq futures (NQU26) added 1.26%. Market momentum was driven by chipmakers following South Korea’s SK Hynix’s successful $24.5 billion U.S. depositary receipts offering, which was over seven times oversubscribed, highlighting robust investor demand. Trucking and freight stocks also rose after Citigroup’s positive sector upgrade.

Stocks advanced despite heightened geopolitical tensions in the Middle East, where U.S.-Iran exchanges of airstrikes continued into a second day. Labor market strength supported the rally, as weekly initial unemployment claims unexpectedly dropped to a six-week low of 215,000, surpassing analysts’ expectations. Conversely, housing data dampened sentiment, with June existing home sales falling 2.4% MoM to 4.09 million, below projected growth to 4.20 million.

Outlook for robust Q2 earnings remains bullish, with Bloomberg Intelligence projecting a 23% earnings growth—close to Q1’s 30% surge, far exceeding analysts’ original 12% forecast. AI infrastructure stocks are expected to drive nearly 60% of the S&P 500’s EPS growth in the quarter, underscoring the sector’s dominance. Market dynamics continue to evolve as investors digest earnings momentum and geopolitical developments.

WTI crude oil (CLQ26) retreated over 1% on speculation that escalating U.S.-Iran hostilities may stabilize energy markets. Oil initially spiked after U.S. strikes targeted 90 Iranian installations to disrupt threats to global shipping via the Strait of Hormuz, prompting Iranian retaliation against facilities in Bahrain, Kuwait, and Qatar. President Trump’s recent assertion that the Iran ceasefire has collapsed, coupled with the U.S. revoking Iran’s oil waiver, fuels uncertainty over future supply disruptions. Markets now price in a 26% likelihood of a 25-basis-point Fed rate hike at the July 28–29 FOMC meeting.

Global markets mirrored U.S. gains, with the Euro Stoxx 50 up 1.10%, China’s Shanghai Composite recovering from a month-long low to close +1.65%, and Japan’s Nikkei-225 climbing 1.38%.

Interest Rates

September 10-year T-notes (ZNU6) gained 4 ticks, pushing the yield down 2.8 basis points to 4.551%, as safe-haven demand surged amid geopolitical risks and mixed housing data. A $22 billion 30-year T-bond auction limited gains. European bonds followed, with German bunds down 0.5 basis points to 3.087% and UK gilts falling 7.1 basis points to 4.903% as political and trade headwinds continued.

German trade data presented mixed results: May exports rose 0.9% MoM, defying forecasts of -0.4%, while imports dropped 2.5% MoM, weaker than the expected -0.8% decline. Market participants now discount a 13% chance of a 25-basis-point ECB rate increase at the July 23 policy meeting. Markets retain broader optimism as Q2 earnings momentum and AI-driven growth overshadow macroeconomic headwinds.

US Stock Movers

Chipmakers and AI-focused equities led gains across major indices. The iShares Semiconductor ETF (SOXX) surged over 4%, with ARM Holdings (+11%), SanDisk (+8%), and ON Semiconductor (+8%) among the standout performers. AMD (+7%), Micron (+7%), and KLA (+7%) also benefited from elevated demand for semiconductors and AI infrastructure. Lam Research, Applied Materials, and Marvell Technology each rose more than 6%, reflecting continued capital expenditure in tech sectors.

Trucking stocks accelerated after Citigroup’s positive sector outlook, with FedEx Freight (+7%) and Old Dominion Freight Line (+3%) at the forefront. JB Hunt and CH Robinson gained over 2%, while smaller players like Marten Transport and Saia added modest improvements. Airlines and cruise operators rose alongside lower oil prices, with Norwegian Cruise Line (+5%) and Alaska Air (+4%) leading gains.

Source link