Stock indexes saw a general rise today, primarily driven by a rebound in chipmakers and AI-infrastructure stocks. This movement is attributed to short covering ahead of upcoming earnings reports from major technology companies, starting with Alphabet on Wednesday. The overall market was also supported by a decrease in crude oil prices, following indications of ongoing diplomatic efforts to resolve the US-Iran situation. However, the upward momentum was somewhat limited by weakness observed in software stocks.
Key chipmakers and AI infrastructure companies experienced significant gains. The iShares Semiconductor ETF (SOXX) increased by 2%. Among individual stocks, Western Digital (WDC) rose over 4%, while Intel (INTC), Advanced Micro Devices (AMD), Seagate Technology Holdings Plc (STX), and Sandisk (SNDK) each saw gains exceeding 3%. Applied Materials (AMAT), Marvell Technology (MRVL), Microchip Technology (MCHP), and Texas Instruments (TXN) all climbed by more than 2%. Additionally, Iren Ltd (IREN) surged over 17% after revising its year-end AI-cloud revenue estimate upwards to over $4 billion from the previous $3.7 billion target.
The market outlook is bolstered by strong expectations for Q2 earnings, which are set to begin this week. Bloomberg Intelligence forecasts indicate a potential 23% increase in Q2 earnings, closely tracking Q1's impressive 30% growth. A significant portion of these earnings is anticipated to come from AI spending, with AI infrastructure stocks projected to contribute nearly 60% of the S&P 500's earnings-per-share growth for Q2. Investors are also considering a 14% chance of a 25 basis point rate hike at the FOMC meeting scheduled for July 28-29.
