Stock markets globally edged higher, with the Nasdaq 100 leading the advance due to a significant rebound in chipmakers and AI-infrastructure stocks. This resurgence was fueled by investors seemingly moving past "AI bubble anxieties" and anticipating strong second-quarter earnings from major tech companies. The Technology Select Sector SPDR Fund (XLK) gained 0.9%, the Energy Select Sector SPDR Fund (XLE) rose 0.8%, and the Communication Services Select Sector SPDR Fund (XLC) was up 0.8% driven by Alphabet.
Key chip stocks saw substantial gains, with Micron Technology surging 5.7%, Broadcom Inc. up 3.4%, and the VanEck Semiconductor ETF (SMH) increasing by 1.7%. Other notable movers included Western Digital up over 4%, and Intel, Advanced Micro Devices, Seagate Technology Holdings Plc, and Sandisk all rising more than 3%. This rebound was partly attributed to short covering ahead of upcoming earnings reports from megacap technology companies, including Alphabet and Tesla.
Crude oil prices, specifically Brent and West Texas Intermediate (WTI), initially climbed to five-week highs after renewed hostilities between the US and Iran, with Brent briefly surpassing $90 a barrel. However, prices later pared gains and declined, with WTI holding near $82.60 a barrel, after Iran signaled its willingness for diplomatic solutions. This de-escalation of tensions helped alleviate inflation concerns and contributed to the positive market sentiment, with bond yields in the US and Europe marginally higher and the dollar wavering. The markets are currently pricing a 14% chance of a +25 bp rate hike at the next FOMC meeting.
