U.S. Stocks Rally on Chip Sector Strength and Falling Oil Prices

The S&P 500 Index ($SPX) (SPY) closed Thursday up 0.81%, the Dow Jones Industrial Average ($DOWI) (DIA) rose 0.27%, and the Nasdaq 100 Index ($IUXX) (QQQ) advanced 1.62%. September E-mini S&P futures (ESU26) gained 0.82%, while September E-mini Nasdaq futures (NQU26) climbed 1.63%.

Equities finished higher Thursday, propelled by a rally in semiconductor shares after South Korea’s SK Hynix saw its American depositary receipts (ADRs) offering subscribed more than seven times over, signaling robust investor appetite. The U.S. listing is set to raise approximately $24.5 billion for the company, marking the second-largest such offering by a foreign issuer, according to Bloomberg calculations. Gains in trucking and freight stocks also supported the broader market following a sector upgrade from Citigroup, while declining crude oil prices lifted airline and cruise line operators.

Markets rallied despite an escalation of hostilities in the Middle East, with the U.S. and Iran exchanging attacks for a second consecutive day.

Labor market resilience provided additional support after weekly initial jobless claims unexpectedly fell by 2,000 to a six-week low of 215,000, contrasting with forecasts for a 2,000 increase to 217,000. Conversely, housing data weighed on sentiment after June existing home sales dropped 2.4% month-over-month to 4.09 million, missing expectations for a rise to 4.20 million.

Optimism surrounding second-quarter earnings remains a bullish catalyst. Bloomberg Intelligence forecasts suggest Q2 earnings could rise 23%, approaching Q1’s 30% surge—which more than doubled the 12% analysts had anticipated. Artificial intelligence spending is expected to drive the bulk of growth, with AI infrastructure stocks projected to contribute nearly 60% of the S&P 500’s earnings-per-share expansion in the quarter.

WTI crude oil (CLQ26) reversed an early advance to fall over 1% on speculation that the tit-for-tat strikes between the U.S. and Iran will not escalate further. Prices initially rose after the U.S. military struck roughly 90 Iranian targets Thursday to degrade the country’s ability to threaten commercial shipping in the Strait of Hormuz. Iran retaliated by targeting U.S. bases in Bahrain, Kuwait, and Qatar with drones and missiles. On Wednesday, President Trump declared the ceasefire with Iran over, raising the prospect of sustained conflict that could disrupt energy supplies. The U.S. also revoked the Iran oil waiver on Tuesday, ending the legal purchase and transport of Iranian oil.

Markets are pricing in a 24% probability of a 25-basis-point rate hike at the next FOMC meeting on July 28-29.

Overseas markets closed higher Thursday. The Euro Stoxx 50 added 1.28%, China’s Shanghai Composite rebounded from a one-month low to gain 1.65%, and Japan’s Nikkei 225 Stock Average rose 1.38%.

Interest Rates

September 10-year T-notes (ZNU6) closed up 8.5 ticks, pushing the 10-year T-note yield down 4.0 basis points to 4.539%. Treasuries advanced amid falling crude prices, which lowered inflation expectations and bolstered the case for dovish Fed policy. Gains accelerated after weaker-than-expected June existing home sales data. Strong demand for the Treasury’s $22 billion auction of 30-year bonds—which posted a bid-to-cover ratio of 2.44, above the 10-auction average of 2.40—pushed prices to session highs in the afternoon.

Upside in T-notes was capped after jobless claims unexpectedly fell to a six-week low, signaling labor market strength that is hawkish for Fed policy. Thursday’s equity rally also reduced safe-haven demand for government debt.

European government bond yields declined. The 10-year German bund yield retreated from a 1.5-month high of 3.118% to finish down 0.8 basis points at 3.084%. The 10-year UK gilt yield fell 7.7 basis points to 4.897%.

German trade data was mixed: May exports unexpectedly rose 0.9% month-over-month against expectations for a 0.4% decline, while imports fell 2.5%, weaker than the projected 0.8% drop.

Swaps indicate a 14% chance of a 25-basis-point ECB rate hike at the July 23 policy meeting.

US Stock Movers

Chipmakers and AI infrastructure stocks led the market higher. The iShares Semiconductor ETF (SOXX) surged over 3%. ARM Holdings (ARM) jumped more than 9%, and SanDisk (SNDK) climbed over 8%. Advanced Micro Devices (AMD) and Lam Research (LRCX) advanced over 5%, while Western Digital (WDC), Micron Technology (MU), Marvell Technology (MRVL), and ON Semiconductor (ON) rose more than 4%. KLA Corp (KLAC), Applied Materials (AMAT), Seagate Technology (STX), and Microchip Technology gained over 3%, and Analog Devices (ADI), NXP Semiconductors (NXPI), Texas Instruments (TXN), and Qualcomm (QCOM) added more than 2%.

Trucking stocks advanced after Citigroup upgraded the sector. FedEx Freight Holding (FDXF) rallied over 7%, while Old Dominion Freight Line (ODFL) and ArcBest (ARCB) rose over 3%. Knight-Swift Transportation (KNX) and JB Hunt Transport Services (JBHT) gained over 2%, and CH Robinson Worldwide (CHRW), Marten Transport (MRTN), Saia (SAIA), and XPO (XPO) climbed more than 1%.

Airline and cruise line shares rose as WTI crude prices dropped over 1%. Norwegian Cruise Line Holdings (NCLH) surged over 6%, and Alaska Air Group (ALK) gained over 5%. Carnival (CCL) advanced over 4%, while American Airlines (AAL), United Airlines (UAL), Delta Air Lines (DAL), and Royal Caribbean Cruises (RCL) rose more than 2%. Southwest Airlines (LUV) added over 1%.

Energy producers and service providers declined as crude prices fell nearly 2%. APA Corp (APA) slid over 5% to lead S&P 500 losers. Devon Energy (DVN), ExxonMobil (XOM), ConocoPhillips (COP), Halliburton (HAL), Diamondback Energy (FANG), and Occidental Petroleum (OXY) fell over 2%, while Chevron (CVX) dropped more than 1%.

Cerebras Systems (CBRS) jumped over 9% after announcing plans to expand its European AI infrastructure to 200MW of total compute capacity by the end of 2027, though Goldman Sachs downgraded the stock to Sell from Neutral with a $19 price target.

Ceco Environmental (CECO) rose over 5% after JPMorgan Chase initiated coverage with an Overweight rating and a $130 price target.

Comfort Systems USA (FIX) gained over 5% after Goldman Sachs reinstated coverage with a Buy rating and a $2,159 price target.

Granite Construction (GVA) tumbled over 12% after Goldman Sachs downgraded the stock to Sell from Neutral with a $139 price target.

Paramount Skydance (PSKY) fell over 4% after Arete Research downgraded the stock to Sell from Neutral with a $2 price target.

Costco Wholesale (COST) dropped over 4% to lead Nasdaq 100 decliners after reporting June comparable sales rose 8.8%, missing the 9.8% consensus estimate.

PepsiCo (PEP) fell over 3% after reporting Q2 operating profit of $4.02 billion, below the $4.06 billion consensus.

International Business Machines (IBM) declined over 2% after Starbucks announced it is developing in-house AI tools that could replace some software applications currently sourced from IBM.

Earnings Reports (7/10/2026)

Delta Air Lines Inc (DAL), Frequency Electronics Inc (FEIM), Hingham Institution For Savings (HIFS).

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