On Wednesday, July 10, tech stocks, particularly in the chip sector, saw extended losses after wild swings. The Nasdaq declined 1.2%, with the Philadelphia Semiconductor Index experiencing an extreme 10 percentage point range, dropping 8.6% at its lowest. This comes as Super Micro announced a $7 billion equity raise, causing its shares to fall 12% in premarket trading, to fulfill $39 billion in orders. Intel, AMD, and Nvidia were also lower.
Investors are bracing for a hawkish Federal Reserve, with rate hike bets increasing ahead of the day's CPI print and next week's FOMC meeting. The core CPI forecast is 2.9%, up 0.1% from a year ago, and headline inflation is expected to come in at a four-handle (north of 4%), the hottest in two years. This is influenced by surging energy costs, with Brent crude reaching $91 and WTI at $87, though the market is pricing in a resolution to Middle East tensions. Some analysts still predict rate cuts, with Veronica Clark of Citi suggesting 75 basis points in cuts this year through September, October, and December.
Geopolitical tensions stemming from the US-Iran conflict continue to impact sentiment and commodity markets. While oil prices eased marginally on Friday, they remained on track for strong weekly gains, with Brent up 6% and WTI up nearly 5% for the week. The conflict has disrupted energy flows and raised concerns over global oil supplies, delaying the full reopening of the Strait of Hormuz. Experts like Bjarne Schieldrop of SEB suggest a price closer to $80 a barrel is more consistent with current market fundamentals than $70.
Despite the market fragility, a record-breaking SpaceX IPO, four times oversubscribed with $250 billion in demand, is generating significant investor interest. Other major deals include Apollo and Blackstone finalizing a $35 billion finance package for Anthropic to expand its AI infrastructure. TSMC reported a 30% jump in sales for May, strong but weaker than expected, highlighting the continued demand for AI compute space. Oracle's ability to convert AI bookings into revenue is also a key focus.
