Stocks Climb as Oil Decline Outweighs Chip Rout: Markets Wrap
(Bloomberg) — A rotation that has seen investors bail from high-profile chipmakers in favor of more economically sensitive industries picked up speed, with stocks rising on strong earnings and a drop in oil prices.
The S&P 500’s equal-weighted version — which strips out market-value biases — hit record highs. The Dow Jones Industrial Average added 1.3%. Those gains outweighed a rout in semiconductor giants that had earlier put the Nasdaq 100 on the brink of a technical correction. Brent crude fell below $85, easing inflation worries and sending bond yields lower ahead of the Federal Reserve decision.
Strong profit growth and undemanding valuations are among the reasons keeping riskier assets resilient to a more challenging inflation backdrop, according to HSBC Holdings Plc strategists led by Max Kettner.
“There is good reason for the strength in risk assets,” they noted, citing a solid start to second-quarter earnings, a rebound in US economic forecasts, lower equity valuations and other positive catalysts.
Such resilience has tempered concerns about the sustainability of the artificial-intelligence spending boom, with chipmakers heading toward their worst month since 2008. That was after the group notched its best-ever quarter on skepticism over whether the vast sums being poured into AI will justify lofty valuations.
“We maintain a constructive outlook on semis amid robust AI demand, but we believe the recent divergence in sector performance is in line with our view that there are more ways to participate in potential market gains than through a narrow set of AI-linked stocks,” said Ulrike Hoffmann-Burchardi at UBS Chief Investment Office.
The slide underscores how quickly sentiment has turned on one of the market’s most-crowded trades. It also makes for a tough setup heading into earnings from a slew of megacaps. Microsoft Corp. and Meta Platforms Inc. are due to report results Wednesday, followed by Apple Inc. and Amazon.com Inc.’s figures on Thursday.
“Our sense is that although these companies offer outsized growth at reasonable valuations, investor worries over capex need to abate before these stocks are rewarded for their quarterly results,” said Chris Senyek at Wolfe Research.
Elsewhere, Treasuries rose for a third straight day, buoyed by a sharp retreat in oil prices as tensions in the Middle East eased.
“The oil impact of the conflict on headline energy inflation is straightforward and supports the view that the consumer price index may have peaked in May if oil prices do not break to new highs,” said Angelo Kourkafas at Edward Jones. “The soft consumer and producer inflation readings in June buy the Fed some time to assess how energy disruptions and inflation evolve over the summer.”
Corporate Highlights:
Meta Platforms Inc. and BlackRock Inc. plan to build a 1-gigawatt data center complex in Texas that will cost about $14 billion to develop, adding to a wave of investment in the computing hubs that power AI. Boeing Co. generated better-than-expected cash flow in the second quarter on continued strong demand for its aircraft, extending the US manufacturer’s turnaround efforts after years of crises. Coca-Cola Co. raised its full-year outlook, bolstered by demand last quarter while it served as a major sponsor of the FIFA World Cup. United Parcel Service Inc.’s outlook for volume and profit margins underwhelmed investors looking for stronger signs of improvement as the courier unwinds its relationship with Amazon.com Inc. Visa Inc. is eliminating about 2,600 jobs as Chief Executive Officer Ryan McInerney seeks to make the firm more efficient as it competes in an increasingly tough payments industry. Some of the main moves in markets:
Stocks
The S&P 500 rose 0.4% as of 12 p.m. New York time The Nasdaq 100 fell 0.5% The Dow Jones Industrial Average rose 1.3% The Stoxx Europe 600 rose 0.4% The MSCI World Index rose 0.3% Currencies
The Bloomberg Dollar Spot Index fell 0.1% The euro rose 0.3% to $1.1400 The British pound rose 0.2% to $1.3309 The Japanese yen was little changed at 163.66 per dollar Cryptocurrencies
Bitcoin fell 1.6% to $63,867.41 Ether fell 1.4% to $1,918.54 Bonds
The yield on 10-year Treasuries declined six basis points to 4.59% Germany’s 10-year yield declined three basis points to 3.10% Britain’s 10-year yield declined five basis points to 4.94% Commodities
West Texas Intermediate crude fell 5.2% to $78.33 a barrel Spot gold fell 0.7% to $4,046.87 an ounce ©2026 Bloomberg L.P.
