Market Indexes Mixed as AI Chip Rally Offsets Apple Weakness; Oil Prices Jump on Geopolitical Tensions

The S&P 500 Index dipped 0.01% on Thursday, closing at a two-week low, while the Dow Jones Industrial Average climbed 0.14% to a record high. The Nasdaq 100 gained 0.75%. Futures also showed modest gains, with September E-mini S&P futures up 0.01% and September E-mini Nasdaq futures rising 0.80%.

Technology stocks drove the mixed performance, as declining shares across the “Magnificent Seven” outweighed strength in chipmakers. Apple fallen more than 6% after raising prices on Macs, iPads, and other products due to supply constraints in memory and storage components. Amazon and Microsoft dropped over 3%, Meta declined more than 2%, and Nvidia fell 1%, while Alphabet and Tesla also retreated.

The weakness in software stocks pressured the market, with losses in shares of Atlassian, Palantir, and ServiceNow.

However, a strong showing in chipmaking and artificial intelligence stocks helped offset some of the declines. Micron Technology surged more than 15% after forecasting fourth-quarter revenue of $50 billion, well above the $43.24 billion consensus. Qualcomm gained 3% after projecting over $15 billion in annual AI-related sales by fiscal 2029.

Strong broader economic data supported equities. Second-quarter GDP was revised up to 2.1%, while weekly jobless claims fell 12,000 to 215,000—better than the 225,000 expected. Personal spending and income both rose 0.7% in May, exceeding forecasts, and non-defense capital goods orders jumped 1.6%.

Bond markets reacted to the inflation data, as the core PCE price index—the Federal Reserve’s preferred measure—rose 3.4% annually, matching expectations. The 10-year Treasury yield slipped to 4.36%, its lowest level in six weeks.

In crude oil markets, prices rebounded over 2% as geopolitical tensions flared in the Persian Gulf. A cargo ship was struck by an unknown projectile off the coast of Oman, near the strategic Strait of Hormuz, prompting several tankers to reroute. WTI crude futures traded near $75 a barrel.

Internationally, European and Asian markets largely advanced. Japan’s Nikkei jumped 4.6%, the Euro Stoxx 50 rose 0.85%, and China’s Shanghai Composite edged up 0.2%.

Interest Rates

September 10-year T-note futures rose 3 ticks, pushing the yield down 0.2 basis points to 4.390%. A softer-than-expected core PCE reading helped underpin the rally in bond prices. Demand for the Treasury’s $44 billion 7-year T-note auction was solid, with a bid-to-cover ratio of 2.50, slightly above the recent average of 2.47.

European bond markets showed divergence. The 10-year German bund yield fell to 2.845%, its lowest since February, while UK gilt yields ticked up modestly.

Looking ahead, markets are pricing in roughly a 32% chance of a 25 basis point rate hike at the July 28-29 FOMC meeting. Euro zone swaps suggest only a 6% probability of an ECB tightening at the July 23 gathering.

Equity Movers

Among individual stocks, shares of Coinbase, MicroStrategy, and other crypto-exposed firms fell sharply as Bitcoin tumbled to its lowest level since mid-2023.

Biotechnology firm Bio-Teche rose 20% after Merck agreed to acquire it for approximately $11.3 billion. Xylem and McCormick & Co. also posted gains following analyst upgrades and a strong sales report, respectively.

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