Stocks finished mostly higher today, with the Nasdaq gaining 1.00%, the S&P 500 rising 0.70%, and the Dow advancing 0.53%. The Russell 2000 fell 0.50%, however, as smaller companies lagged. The major averages also ended the week with modest gains. Technology stocks continued Thursday’s rebound, led by Amazon after the company reported much stronger growth in its cloud-computing business. Semiconductor and AI-related stocks were generally firmer, although memory stocks were more mixed. Energy producers, defense companies, industrial contractors, trucking companies, and several Chinese technology stocks also performed well.

The market’s gains were not broad-based. Apple fell sharply after issuing a weaker-than-expected outlook for the September quarter, while healthcare, airlines, restaurants, apparel retailers, food companies, and telecommunications stocks generally underperformed. Amazon was the day’s biggest market story. Revenue from Amazon Web Services grew 37%, a sharp acceleration from the previous quarter, while the division’s profitability and backlog also exceeded expectations. Management said both its AI services and custom-chip businesses have reached annualized revenue of more than $25 billion. These results provided some of the clearest evidence yet that the company’s enormous investment in AI infrastructure is generating meaningful growth.

Apple presented a more challenging picture. Its latest quarterly results were generally solid, but management warned that supply constraints and rising component costs would weigh on the coming quarter. The company now faces the difficult decision of whether to absorb those higher expenses or raise prices and risk weakening customer demand. Results elsewhere were mixed. Eaton and several electrical-equipment companies reported strong demand from data centers and other end markets. Dexcom delivered better-than-expected growth and raised its annual outlook. First Solar reaffirmed its guidance, while Floor & Decor reported signs that flooring demand may be stabilizing.

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On the weaker side, Roblox reported slower user growth and monetization and withdrew its annual guidance. Reddit delivered strong financial results but raised concerns about U.S. user growth and its dependence on traffic from Google. Coinbase reported weaker trading activity and revenue, while several chemical companies highlighted sluggish global demand and higher energy costs.

Bond yields moved higher again, with Treasury yields rising approximately four to five basis points. Investors continued to digest the Federal Reserve’s decision this week to leave rates unchanged despite three policymakers voting for an increase. Those dissenting officials reiterated Friday that inflation remains above the Fed’s 2% target and argued that modest increases now could reduce the need for larger moves later.

Economic data remained broadly constructive. Consumer sentiment improved to its highest level since February, supported by better views across income and age groups. Inflation expectations were unchanged, however, and remain elevated. Employment costs rose 0.9% during the second quarter, in line with expectations, while a regional manufacturing report showed stronger new orders.

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Here’s Our Take

Today’s session reinforced the increasingly divided picture within the technology sector. Amazon and Microsoft have now provided credible evidence that their heavy AI investments are producing faster cloud growth, expanding backlogs, and new revenue streams. These results strengthen the argument that the AI infrastructure boom remains grounded in genuine customer demand rather than speculation alone.

At the same time, Apple’s outlook illustrates the other side of the AI investment cycle. Surging demand for memory, chips, and computing equipment is raising costs throughout the technology supply chain. Companies without rapidly growing AI-related revenue may face margin pressure or be forced to raise prices.

The Federal Reserve also remains an important source of uncertainty. Recent inflation readings have improved, but several policymakers clearly believe progress is not yet sufficient. The combination of resilient consumer spending, limited layoffs, elevated oil prices, and strong AI-related investment gives the Fed room to remain cautious and potentially raise rates later this year.

The broader earnings season has been strong, with healthy consumer spending, pricing power, and AI investment supporting corporate profits. However, investors are demanding more than companies simply beating expectations. Businesses must also demonstrate durable growth, manageable costs, and a clear return on investment.

As July closes, the market appears healthier than the headline volatility might suggest. The recent decline in crowded AI trades has reduced some speculative excess, while earnings have continued to support the longer-term investment case. Still, higher interest rates, geopolitical uncertainty, and a seasonally more difficult August could keep markets uneven in the near term.

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DISCLAIMER: The content provided in this newsletter does not constitute investment advice, financial advice, trading advice, or any other form of personal recommendation. Nothing in this newsletter should be interpreted as a suggestion to buy, sell, or hold any investment or security. All content is for general informational purposes only and should not be relied upon for making investment decisions. Readers should conduct their own research and consult qualified financial advisors before making any investment decisions. To read our full disclaimer, click here.

Stocks rebounded sharply today, with the Nasdaq gaining 2.78%, the S&P 500 rising 1.66%, the Russell 2000 advancing 1.37%, and the Dow climbing 1.19%.

Technology and AI-related stocks led the recovery following several weeks of heavy selling. Semiconductor, memory, networking, data-center infrastructure, and power-related companies were among the strongest performers. The rally was concentrated in many of the market’s recent laggards, however, while more defensive and interest-rate-sensitive sectors such as utilities, real estate, insurance, and healthcare generally trailed.

Microsoft was the standout among the largest technology companies. Its cloud-computing business grew faster than expected, and management projected further acceleration during the current quarter. The company also reported more than 30 million paid users for its Copilot AI products and provided a more measured capital-spending outlook than investors had feared. The results offered important evidence that heavy AI investment is translating into stronger revenue growth.

Other companies tied to the AI infrastructure buildout also reported strong demand. Lam Research delivered better-than-expected results and guidance, supported by advanced semiconductor packaging and memory demand. Quanta Services and EMCOR reported record backlogs and strong growth from electrical and mechanical infrastructure projects, while Oracle expanded its partnership with Google to bring Gemini models to more business customers.

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Meta’s results told a more complicated story. Revenue exceeded expectations and AI continued to support user engagement and advertising performance, but profitability fell short and management indicated that spending could rise further. The stock declined as investors questioned when Meta’s extensive investments in computing infrastructure and new AI initiatives will produce sufficient financial returns.

Results outside technology were generally constructive. Mastercard reported strong payment volumes, Chipotle benefited from improved customer traffic, and Starbucks reported better sales trends in North America. However, Norwegian Cruise Line declined after offering a more cautious outlook, while several healthcare and consumer companies also fell following disappointing guidance.

Economic data presented a mixed picture. The Federal Reserve’s preferred measure of underlying inflation rose just 0.1% in June, its smallest monthly increase since March 2025. The labor market also remained resilient, with new unemployment claims staying below 200,000.

Economic growth, however, slowed more than expected. The U.S. economy expanded at a 1.5% annualized rate during the second quarter, down from 2.1% in the first quarter. Government spending, business investment, and exports weighed on growth, although consumer spending remained positive and investment related to AI continued to provide support.

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Here’s Our Take

Today’s rally showed how quickly sentiment toward AI can shift when companies provide clear evidence that their investments are producing results.

Microsoft’s report was particularly important because it addressed the central concern surrounding the AI boom: whether record capital spending can generate enough revenue, profits, and cash flow to justify the cost. Faster cloud growth, rising Copilot adoption, and measured spending commentary offered encouraging answers.

The results from semiconductor equipment, electrical infrastructure, and data-center construction companies also reinforced that demand for AI computing capacity remains strong. The recent selloff therefore appears to have been driven at least partly by crowded positioning, elevated expectations, and concerns about financing rather than a collapse in the underlying demand outlook.

Meta’s decline shows that investors are still applying a high level of scrutiny. Companies that significantly increase spending without providing a clear path to financial returns may continue to face pressure, even when their core businesses remain healthy. The market is increasingly distinguishing between AI spending that is already supporting growth and investment whose eventual payoff remains uncertain.

The economic backdrop also remains mixed but manageable. Cooler monthly inflation and a resilient labor market are encouraging, while slower economic growth gives the Federal Reserve a reason to remain cautious about further interest-rate increases. At the same time, the elevated inflation reading within the GDP report and continued geopolitical uncertainty mean policymakers are unlikely to declare victory over inflation.

Today’s rebound was encouraging, but it was once again driven heavily by a relatively narrow group of technology and AI-related stocks. For the rally to become more durable, investors will want to see continued earnings growth from market leaders alongside broader participation from consumer, industrial, financial, and smaller companies.

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Stocks finished sharply lower today, with the Dow declining 2.18%, the Nasdaq falling 1.74%, the Russell 2000 dropping 1.61%, and the S&P 500 losing 1.51%.

Trading was volatile throughout the afternoon as investors reacted to the Federal Reserve’s latest interest-rate decision. The Fed left its benchmark rate unchanged at 3.50%–3.75%, as expected, but three officials voted in favor of a quarter-point increase. The unusually large number of dissenting votes reinforced the view that several policymakers remain concerned that inflation is still too high.

Fed Chair Kevin Warsh provided little guidance about what the central bank may do next. He repeated the Fed’s commitment to bringing inflation back to its 2% target but avoided offering clear signals about whether rates could rise in September or later this year. That uncertainty contributed to sharp moves across both stocks and bonds.

Shorter-term Treasury yields declined as investors reduced their expectations for rate increases this year. Longer-term yields moved sharply higher, however, with the 30-year Treasury yield reaching its highest level since 2007. That move may reflect concerns about persistent inflation, government borrowing, and the large amount of debt financing needed to support AI infrastructure spending.

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Technology and AI-related stocks remained under pressure. Semiconductor and memory stocks continued their recent selloff, while Nvidia, Tesla, and SpaceX were among the weakest large technology names. Investors remain concerned about the sustainability of massive AI capital spending, increasingly complex financing arrangements, competition from lower-cost models, and the high expectations already reflected in many stock prices.

Corporate earnings remained strong overall, with nearly 87% of reporting S&P 500 companies exceeding profit expectations so far. However, stock reactions continued to show that the bar is extremely high. Vertiv fell despite raising its full-year outlook because revenue missed expectations, while KLA and NXP Semiconductor declined after solid results failed to deliver enough upside. By contrast, Seagate gained after reporting strong pricing and demand, while Amphenol benefited from record orders and continued strength in data-center equipment.

Outside technology, results were mixed. Ford rose after beating expectations and raising its guidance, supported by strong pricing and cash flow. Mondelez gained after reporting resilient demand and increasing its sales outlook. Procter & Gamble declined after weaker organic growth and a cautious forecast, while several housing- and building-related companies fell as high rates continued to pressure demand.

Geopolitical risks also returned to the forefront. Oil prices jumped 6.6% following renewed attacks involving the United States and Iran and increasingly aggressive statements from both sides. The rise reversed part of the sharp decline in oil earlier this week and renewed concerns that higher energy prices could slow recent progress on inflation.

Investors will now turn to tomorrow’s economic reports, including the first estimate of second-quarter economic growth, personal income and spending, initial jobless claims, and the Fed’s preferred inflation measure. Earnings from Microsoft and Meta which came in after today’s close, followed by Apple and Amazon on tomorrow, should also provide important evidence about AI demand, capital spending, and the health of the consumer.

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Here’s Our Take

Today’s selloff reflected three overlapping concerns: uncertainty about Federal Reserve policy, renewed geopolitical tensions, and continued pressure on the AI trade.

The Fed’s decision itself was not surprising, but the three votes in favor of raising rates sent a more hawkish message than investors expected. At the same time, Chair Warsh offered little guidance about what would cause the Fed to raise rates or remain on hold. Markets generally dislike uncertainty, and the absence of a clear policy framework contributed to the day’s volatility.

The sharp rise in long-term Treasury yields is also worth watching. Lower short-term yields suggest investors expect fewer immediate rate increases, while higher long-term yields point to concerns about inflation, government debt, and heavy corporate borrowing. If long-term rates remain elevated, they could pressure stock valuations, housing affordability, and business investment.

The renewed rise in oil prices further complicates the outlook. Lower energy prices earlier in the week had provided some relief to consumers and inflation expectations. A sustained increase in oil could reverse part of that benefit and make it more difficult for the Fed to declare victory over inflation.

Within technology, the long-term demand for AI infrastructure remains strong, but investors are becoming much less forgiving. Strong earnings and rising order backlogs are no longer sufficient when valuations already assume years of rapid growth. Companies must increasingly demonstrate that heavy capital spending can translate into durable revenue, margins, and cash flow.

The broader earnings season remains fundamentally solid, but today’s trading showed that strong corporate results may not be enough to overcome uncertainty around interest rates, energy prices, and elevated expectations. The next few days of economic data and Big Tech earnings should help determine whether the market can stabilize or whether volatility remains elevated.

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Stocks finished mostly higher today, with the Dow gaining 1.03%, the S&P 500 rising 0.22%, and the Russell 2000 advancing 0.20%. The Nasdaq slipped 0.22% as weakness in semiconductor and AI infrastructure stocks continued to weigh on the technology-heavy index.

The underlying market was stronger than the major indexes suggested. Healthcare, consumer staples, software, financial services, airlines, retailers, restaurants, telecommunications, and media companies generally performed well. Alphabet and SpaceX were also among the stronger large technology names, helping offset another difficult session for semiconductor stocks.

Oil prices fell another 4.1%, dropping below $80 per barrel after declining 7.5% on Monday. Reports that negotiations involving the United States and Iran may be moving closer to a breakthrough reduced concerns about energy supply disruptions. The drop in oil also helped push Treasury yields lower, providing support for consumers and interest-rate-sensitive areas of the market.

AI-related stocks remained under pressure for a fourth consecutive session. Investors continue to question whether the enormous amount of spending on chips and data centers will generate adequate financial returns. Concerns about increasingly complex financing arrangements, competition from China and lower-cost open AI models, and rising borrowing costs for some technology companies have all contributed to the recent pullback.

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Several companies tied to the AI infrastructure buildout also fell despite reporting solid results. Corning, Carrier, Amkor, Sanmina, and other technology suppliers declined as investors focused on cautious outlooks, rising costs, or results that failed to meet extremely high expectations. The reactions suggest that strong earnings alone may no longer be enough when valuations and investor expectations are elevated.

Elsewhere, corporate earnings were generally constructive. Coca-Cola reported strong sales growth and raised its outlook, supporting consumer staples stocks. Boeing produced positive free cash flow despite additional costs on its Air Force One program. Sherwin-Williams, Illinois Tool Works, Celestica, Royal Caribbean, PayPal, and JetBlue also reported encouraging results or raised their forecasts.

Economic data was less upbeat. Consumer confidence declined slightly in July as households became more cautious about business conditions and the labor market. A private employment report also showed that job growth continued to slow. Although neither report pointed to a sharp downturn, they suggest consumers and employers may be becoming somewhat more careful.

Investors are now preparing for Wednesday’s Federal Reserve decision and earnings from Microsoft and Meta. The Fed is widely expected to leave interest rates unchanged, but markets will be watching for signs that officials remain open to raising rates later this year. Apple and Amazon will follow with earnings on Thursday.

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Here’s Our Take

Today’s market activity provided another example of the market broadening beyond semiconductor and AI infrastructure stocks.

The continued decline in oil prices is an important positive development. Lower energy costs can help reduce inflation, improve household purchasing power, and ease pressure on business expenses. If diplomatic progress in the Middle East continues, lower oil prices could give the Federal Reserve more flexibility to leave rates unchanged.

At the same time, the AI trade is going through a necessary period of reassessment. The long-term demand for computing power remains strong, but investors are increasingly questioning the cost, financing, and profitability of the infrastructure being built. Companies are now being judged not only on revenue growth and order backlogs, but also on whether those investments can produce attractive and sustainable returns.

The sharp declines following otherwise solid earnings also show how high expectations have become. When valuations already assume rapid growth and near-perfect execution, even modest disappointments can lead to significant stock-price declines.

The broader market’s ability to advance despite weakness in semiconductors is encouraging. Strength across healthcare, consumer staples, financial services, airlines, retailers, and other sectors suggests that investors continue to find opportunities outside the narrow group of companies that previously led the market.

The Federal Reserve’s message and upcoming Big Tech earnings will now determine whether that broader participation can continue. Investors will be looking for evidence that inflation risks are easing, consumer demand remains resilient, and large technology companies can translate record AI spending into stronger profits and cash flow.

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DISCLAIMER: The content provided in this newsletter does not constitute investment advice, financial advice, trading advice, or any other form of personal recommendation. Nothing in this newsletter should be interpreted as a suggestion to buy, sell, or hold any investment or security. All content is for general informational purposes only and should not be relied upon for making investment decisions. Readers should conduct their own research and consult qualified financial advisors before making any investment decisions. To read our full disclaimer, click here.

Stocks finished mostly higher today, with the Dow gaining 0.51%, the S&P 500 ending nearly unchanged, the Russell 2000 rising 0.62%, and the Nasdaq slipping 0.18%.

The major indexes were quiet, but the underlying market was more positive than the headline numbers suggested. A larger share of stocks advanced, while small caps, software, airlines, retailers, restaurants, financial services companies, and healthcare stocks generally outperformed. Microsoft and Alphabet also gained, helping offset renewed weakness in semiconductor and AI infrastructure stocks.

Oil prices fell 7.5% as fighting between the United States and Iran remained paused and investors grew more hopeful that negotiations could resume. The decline in oil also helped push Treasury yields lower, easing some pressure on consumers and interest-rate-sensitive parts of the market. However, there is still considerable uncertainty around whether the pause will lead to a lasting diplomatic agreement or renewed conflict.

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AI-related stocks remained under pressure. Nvidia fell following reports that it may provide as much as $250 billion in financial support for an enormous OpenAI data center project. The report reinforced concerns about increasingly complex financing arrangements, the sustainability of hyperscaler capital spending, and whether AI companies are taking on too much financial risk to fund continued expansion.

Semiconductor equipment stocks were also pressured by reports that China has begun mass-producing its own advanced chipmaking tools. While the long-term demand for AI computing remains strong, investors are increasingly focused on rising competition, elevated spending, and whether current investments will generate sufficient returns.

Economic data was mixed but broadly stable. Headline durable-goods orders came in below expectations, largely because of weaker aircraft orders. However, business investment in equipment and technology was stronger than expected, with particular strength in computers and electronics. That continues to suggest that companies are investing heavily in AI, data centers, and other productivity-enhancing technologies.

The week ahead is unusually important. The Federal Reserve is expected to leave interest rates unchanged on Wednesday, but investors will be watching closely for signals that officials may still consider raising rates later this year. Approximately 35% of the S&P 500’s market value is also scheduled to report earnings this week, including four of the seven largest technology companies.

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Here’s Our Take

Today’s market action showed that investor leadership continues to broaden beyond semiconductor and AI infrastructure stocks.

The sharp decline in oil prices was especially supportive. Lower energy prices can ease inflation pressure, reduce costs for businesses, and provide some relief to consumers. However, the move depends heavily on whether the pause in Middle East hostilities holds. A renewed escalation could quickly reverse the decline.

The AI investment story also remains intact, but the market is becoming more disciplined. Investors are no longer rewarding every company simply for announcing large AI projects. They are asking more difficult questions about financing, competition, profitability, and the eventual returns on hundreds of billions of dollars in spending.

That increased scrutiny is healthy. The companies most likely to succeed over time will be those that can convert AI investment into measurable revenue growth, stronger margins, and sustainable cash flow without taking excessive financial risks.

This week’s Federal Reserve meeting and technology earnings should provide important answers. The Fed will help clarify the interest-rate outlook, while corporate results should show whether consumer demand remains resilient and whether the largest technology companies are beginning to generate stronger financial returns from their AI investments.

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Stocks finished mostly lower today, with the S&P 500 declining 0.14%, the Nasdaq falling 0.57%, the Russell 2000 dropping 0.92%, and the Dow ending nearly unchanged.

The overall market was fairly balanced, but weakness in large technology companies, software, financials, travel, and healthcare weighed on the major indexes. Nvidia was a notable exception among large technology stocks, while energy, industrials, defense companies, homebuilders, telecommunications, and materials stocks generally performed better.

AI-related shares continued to recover from last week’s sharp selloff. Sentiment was supported by reports that Anthropic plans to deploy a large amount of AMD’s next-generation chips and that OpenAI may raise its projected computing spending through 2030. Super Micro Computer also surged after reporting stronger-than-expected profitability and a record order backlog, reinforcing the view that demand for AI infrastructure remains strong.

At the same time, investors remain focused on whether the massive spending required to build AI systems will generate adequate returns. Reddit fell after reports that it may restrict Google’s use of its content because AI-generated search results could be reducing traffic to Reddit’s platform. Pegasystems also declined sharply after saying rapid changes in AI are causing some customers to delay purchasing decisions.

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Corporate earnings were mixed. AT&T reported better-than-expected subscriber growth and accelerated its share repurchase plans, while CME Group benefited from strong market-data revenue. PulteGroup’s results showed early signs of stabilization in parts of the housing market, although affordability remains a challenge. GE Vernova reported very strong orders but declined after missing profit expectations, highlighting the high bar facing companies tied to the AI and power infrastructure boom.

Oil prices rose 3% as tensions involving the United States, Iran, and shipping routes in the Middle East remained elevated. Treasury yields also moved higher, with investors increasing their expectations that the Federal Reserve could raise interest rates later this year. The probability of a rate increase at next week’s meeting has risen during the week, although a pause remains the most likely outcome.

Investors are now awaiting earnings from Alphabet and Tesla. Alphabet’s results should offer insight into cloud demand, AI spending, and the financial returns from its infrastructure investments, while Tesla’s report is likely to focus heavily on autonomous driving, robotaxis, and future growth initiatives.

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Here’s Our Take

Today’s trading reflected a market in waiting mode rather than a major shift in investor sentiment. The broad indexes moved only modestly, but investors continued repositioning ahead of several important technology earnings reports.

The AI investment cycle still appears strong. New chip commitments, rising computing-spending forecasts, and large order backlogs all point to sustained demand. However, the market is becoming more focused on execution, profitability, and the financial returns generated by that spending.

That distinction is important. Strong demand does not guarantee that every company participating in the AI boom will produce attractive profits or stock-market returns. Companies facing cost overruns, delayed projects, weaker customer demand, or disruption to their existing businesses are likely to face much greater scrutiny.

The broader market remains reasonably healthy, with energy, industrials, housing, telecommunications, and materials stocks helping offset weakness in large technology companies. Still, rising oil prices and higher bond yields could create additional pressure if geopolitical tensions continue.

Alphabet’s results will be especially important because they should help investors assess whether rapid AI spending is translating into stronger cloud revenue, expanding backlogs, and durable earnings growth. The market’s reaction may set the tone for the rest of Big Tech earnings season.

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U.S. stocks finished higher on today, with the S&P 500 gaining 0.89%, the Nasdaq rising 1.29%, the Dow advancing 0.74%, and the Russell 2000 climbing 1.53%.

The main story was a rebound in semiconductor, memory, and AI infrastructure stocks following last week’s sharp selloff. The move did not appear to be driven by one clear catalyst, but investors seemed more willing to step back into areas that had recently fallen the most. Reports that Taiwan Semiconductor may raise chip-production prices next year also reinforced the view that demand for advanced computing capacity remains strong.

The rally extended beyond technology. Small-cap stocks, energy companies, automakers, large banks, industrial companies, metals producers, and healthcare names also performed well. Software, retailers, regional banks, and several payment companies lagged, showing that the day’s gains were broad but not uniform.

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Corporate earnings were generally company-specific. 3M rose after posting its strongest organic growth in nearly five years and raising its outlook. General Motors also gained after beating expectations and increasing its full-year guidance. Hasbro delivered strong results driven by Magic: The Gathering. Danaher fell, however, after lowering the upper end of its growth forecast because of softer bioprocessing demand.

Oil prices rose 2.3% as disruptions around the Strait of Hormuz and Red Sea continued to create concerns about global energy supplies. Despite the ongoing conflict, markets still appear to expect an eventual diplomatic solution. Treasury yields also moved higher for a second consecutive day, reflecting both the rise in oil prices and expectations that the Federal Reserve may keep interest rates elevated for longer.

The economic calendar remained quiet, leaving earnings as the main focus. Alphabet and Tesla report after Wednesday’s close, with investors likely to pay close attention to AI spending, demand trends, margins, and the returns being generated from large capital investments.

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Here’s Our Take

Today’s rebound suggests that investors are not abandoning the AI and semiconductor theme, but they are becoming more selective about valuations and execution. The recent selloff was partly driven by crowded investor positioning rather than a clear deterioration in demand. Strong spending plans across the technology industry, continued demand for advanced chips, and reports of potential price increases all support the view that the AI infrastructure cycle remains intact.

At the same time, the market is beginning to distinguish more carefully between companies benefiting from genuine earnings growth and those relying mainly on enthusiasm around the broader theme. That is a healthy development and one that should reward businesses with strong balance sheets, clear competitive advantages, and visible returns on investment.

The broader participation from small caps, industrials, banks, autos, and healthcare was also constructive. A market supported by several sectors is generally healthier than one dependent on a narrow group of technology companies. The next major test will come from Alphabet and Tesla. Their results should provide more insight into whether heavy spending on AI and new technologies is translating into stronger revenue, margins, and long-term cash flow.

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Stocks finished modestly lower today, with the S&P 500 declining 0.19%, the Nasdaq slipping 0.05%, the Dow falling 0.59%, and the Russell 2000 dropping 0.67%.

The session was relatively quiet, but the market continued to digest last week’s sharp pullback in semiconductor and AI-related stocks. Chip shares stabilized early in the day before giving back some gains, while memory and selected AI infrastructure companies performed well. Large technology stocks were mixed, with Alphabet benefiting from reports that it is developing a more efficient AI chip, while Apple and Tesla declined.

Investors also continued rotating between recent market leaders and more traditional sectors. Software, energy, airlines, payment companies, off-price retailers, and Chinese technology stocks generally outperformed. Banks, homebuilders, industrial companies, consumer staples retailers, and pharmaceutical stocks were among the weaker areas.

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AI investment remained a major focus. AMD announced that Microsoft will use its new Helios AI computing system, while Alphabet is reportedly developing a chip that could run its Gemini models much more efficiently. Alibaba also introduced a new AI model that it said compares favorably with leading U.S. offerings. At the same time, reports that Oracle is facing cost overruns and delays at several AI data center projects renewed questions about the expense and complexity of building this infrastructure.

Corporate news also supported several individual stocks. IREN raised its year-end AI cloud revenue target after securing additional long-term contracts, while AMC reported stronger-than-expected results and benefited from a strong opening weekend at the box office. Domino’s reported modestly positive U.S. sales growth despite continued pressure on restaurant spending.

Geopolitical tensions remained elevated following additional U.S. strikes on Iran and further disruptions to traffic through the Strait of Hormuz. Oil prices, however, finished little changed as investors continued to expect that negotiations may eventually provide a path toward de-escalation. The economic calendar is light this week, leaving corporate earnings as the main market catalyst. Alphabet and Tesla are among the most closely watched companies reporting, with investors likely to focus on AI spending, profitability, demand trends, and the returns companies are generating from their large technology investments.

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Here’s Our Take

Monday’s market activity reflected a period of consolidation rather than a meaningful change in the broader outlook. Semiconductor and AI-related stocks appear to be stabilizing after last week’s sharp decline, but investors remain cautious about high valuations, crowded positioning, and the enormous capital required to support continued AI growth.

The fundamental demand for AI infrastructure still appears strong. New product announcements from AMD and Alphabet, rising cloud revenue targets, and continued hyperscaler investment all suggest that the buildout remains in its early stages. However, reports of cost overruns and project delays are important reminders that strong demand does not automatically translate into attractive returns for every company involved.

With little economic data scheduled this week, earnings will likely determine the market’s near-term direction. Results from Alphabet and Tesla should provide fresh insight into technology spending, consumer demand, and whether recent investment levels are beginning to produce measurable financial returns.

For long-term investors, the central question is no longer whether AI investment will continue, but which companies can turn that investment into durable revenue, profits, and cash flow. That distinction is likely to become increasingly important as the market moves beyond the initial enthusiasm surrounding the theme.

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Stocks ended the week lower today, with the S&P 500 declining 1.01%, the Nasdaq falling 1.40%, the Dow dropping 0.77%, and the Russell 2000 slipping 0.42%. All four major indexes also finished the week in negative territory.

Technology and AI-related stocks remained the main source of weakness. Semiconductor shares continued their sharp pullback, with the group now more than 20% below its June peak. Meta, Alphabet, Tesla, and other large technology companies also declined, while banks, airlines, homebuilders, retailers, and media companies came under pressure. Energy, insurance, healthcare, railroads, and grocery stocks held up better than the broader market.

The recent decline in semiconductor and AI infrastructure stocks still appears to be driven partly by investors taking profits from one of the market’s most crowded trades. However, concerns are also growing around the enormous amount of spending required to build AI infrastructure, increased competition from Chinese and open-source models, expanding chip and memory production, and whether future earnings can justify current valuations.

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Higher oil prices added another challenge. Crude oil rose 4.5% on Friday and recorded its strongest weekly gain since April as tensions between the United States and Iran remained elevated. Reports that the United States may support additional military action raised concerns about further disruption to shipping and energy supplies. Markets still expect diplomacy to eventually prevail, but neither side currently appears eager to compromise.

Corporate earnings were mixed. Netflix declined after reporting slower North American revenue growth and offering a softer outlook for the current quarter. Intuitive Surgical fell despite beating earnings expectations because U.S. procedure growth slowed. Travelers delivered strong results as catastrophe losses declined, while Alcoa’s results were affected by weaker aluminum prices late in the quarter.

Economic data was somewhat more encouraging. Consumer sentiment improved more than expected in July, helped by lower gasoline prices earlier in the month, while short-term inflation expectations declined. Housing starts also rose sharply, although the increase was concentrated in multifamily construction, while single-family homebuilding remained weak. Industrial production was positive but slightly below expectations.

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Here’s Our Take

Today’s decline reflected a broader move away from risk rather than the healthier sector rotation seen earlier in the week. The sharp pullback in semiconductor stocks is meaningful, but it does not necessarily indicate that the long-term AI investment story has broken down. Strong results and spending plans from companies such as Taiwan Semiconductor and ASML continue to show that demand for advanced computing infrastructure remains substantial.

The more immediate concern is that expectations and investor positioning became too aggressive. Even companies with strong fundamentals can experience sizable declines when valuations are elevated and too many investors are positioned in the same trade. Continued volatility in AI-related stocks should therefore not be surprising.

The broader economic picture remains relatively stable. Inflation data improved this week, consumers are feeling somewhat better, and the labor market and overall economy continue to expand. However, rising oil prices could complicate that progress if geopolitical tensions persist and begin pushing gasoline, transportation, and other costs higher again.

With the Federal Reserve likely to leave interest rates unchanged later this month, attention will now shift more heavily toward corporate earnings. Investors will be looking for evidence that strong AI spending, resilient consumer demand, and healthy profit growth can continue to support the market despite elevated valuations and geopolitical uncertainty.

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DISCLAIMER: The content provided in this newsletter does not constitute investment advice, financial advice, trading advice, or any other form of personal recommendation. Nothing in this newsletter should be interpreted as a suggestion to buy, sell, or hold any investment or security. All content is for general informational purposes only and should not be relied upon for making investment decisions. Readers should conduct their own research and consult qualified financial advisors before making any investment decisions. To read our full disclaimer, click here.

U.S. stocks finished mostly lower today, with the S&P 500 declining 0.51%, the Nasdaq falling 1.47%, the Dow slipping 0.20%, and the Russell 2000 edging down just 0.06%.

While the major indexes declined, the underlying picture was more constructive than the headlines suggested. Many of the largest technology and AI-related companies continued to face selling pressure, particularly semiconductor stocks, while investors shifted toward healthcare, industrials, transportation, retailers, homebuilders, and other more traditional sectors. This continued rotation helped equal-weighted indexes significantly outperform the market-cap weighted S&P 500, suggesting weakness remained concentrated in a relatively small group of large technology stocks.

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Economic data painted a picture of a resilient U.S. economy. Retail sales came in largely as expected, jobless claims fell to their lowest level in over two months, and manufacturing activity in the Philadelphia region unexpectedly surged to its strongest reading since 2021. While the housing market remains challenged by elevated mortgage rates, consumer spending and labor market data continue to point toward an economy that is slowing only modestly rather than falling into recession.

Corporate earnings also remained encouraging. Taiwan Semiconductor raised both its revenue and capital spending outlook, reinforcing that demand for AI infrastructure remains exceptionally strong despite recent weakness in semiconductor share prices. UnitedHealth, Abbott Laboratories, Citizens Financial, and J.B. Hunt all delivered solid quarterly results, while Google weighed on technology stocks after reports that the launch of its next-generation Gemini AI model has been delayed.

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Here’s Our Take

Today’s market decline was less about deteriorating fundamentals and more about continued repositioning within the market. Investors have been taking profits in many of the companies that have led the AI rally while rotating into sectors that have lagged for much of the year. Importantly, the underlying economic data continues to support a healthy backdrop. Consumer spending remains resilient, the labor market remains strong, and manufacturing activity appears to be improving even as inflation has cooled over the past two days.

At the same time, earnings continue to reinforce that AI investment is not slowing. Taiwan Semiconductor’s decision to raise both revenue and capital spending guidance underscores that long-term demand for advanced chips and AI infrastructure remains intact, even if the stocks themselves experience periods of heightened volatility. As earnings season accelerates over the next several weeks, company fundamentals, not daily market rotations, are likely to become the primary driver of stock performance. For long-term investors, today’s trading looks more like a healthy broadening of market leadership than a sign that the broader investment outlook has materially weakened.

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DISCLAIMER: The content provided in this newsletter does not constitute investment advice, financial advice, trading advice, or any other form of personal recommendation. Nothing in this newsletter should be interpreted as a suggestion to buy, sell, or hold any investment or security. All content is for general informational purposes only and should not be relied upon for making investment decisions. Readers should conduct their own research and consult qualified financial advisors before making any investment decisions. To read our full disclaimer, click here.

Stocks finished higher today, with the S&P 500 gaining 0.38%, the Nasdaq rising 0.62%, the Dow adding 0.29%, and the Russell 2000 advancing 0.39%.

While the major indexes ended in positive territory, there was a notable shift beneath the surface. Investors continued rotating away from many of the AI infrastructure and semiconductor stocks that have led the market for much of the year, even after strong earnings from ASML. At the same time, several of the largest technology companies, financials, consumer-related businesses, and payment companies attracted buying interest, helping lift the broader indexes.

The market also received another encouraging inflation report. Producer prices, which measure inflation at the wholesale level, came in lower than expected, following Tuesday’s softer-than-expected consumer inflation report. Together, the two reports reinforced the view that inflation pressures may be gradually easing, which helped Treasury yields move lower and supported equity markets.

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Earnings season continued with another wave of financial companies reporting results. BlackRock, Morgan Stanley, and several regional banks generally delivered solid results, benefiting from strong trading activity, resilient asset management flows, and continued strength in capital markets. Healthcare was mixed, with Johnson & Johnson reporting solid results while Elevance Health disappointed investors despite raising its full-year guidance as margins remained under pressure.

Geopolitical tensions between the United States and Iran remained elevated, but markets largely looked through the headlines. Oil prices finished little changed as investors continued to expect that, despite the ongoing military exchanges, both sides will ultimately seek a diplomatic resolution rather than allowing the conflict to escalate significantly.

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Here’s Our Take

The biggest story this week has not been the movement of the major indexes, but the continued rotation underneath the surface of the market.

After several months of extraordinary gains in AI-related stocks, investors are becoming more selective. That does not necessarily signal the end of the AI investment cycle. Instead, it reflects a healthier market where leadership broadens beyond one narrow group of companies. Strong earnings from companies like ASML continue to reinforce that long-term demand for AI infrastructure remains intact, even if stock prices become more volatile in the near term.

At the same time, two consecutive inflation reports came in better than expected, providing some reassurance that inflation may continue moving in the right direction. If that trend persists, it could reduce pressure on interest rates and create a more supportive environment for both businesses and investors.

With earnings season now underway, company fundamentals will likely become a much bigger driver of market performance than macroeconomic headlines. We expect volatility to remain elevated over the coming weeks, but for long-term investors, the focus should remain on business quality, earnings growth, and long-term competitive advantages rather than day-to-day market swings.

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DISCLAIMER: The content provided in this newsletter does not constitute investment advice, financial advice, trading advice, or any other form of personal recommendation. Nothing in this newsletter should be interpreted as a suggestion to buy, sell, or hold any investment or security. All content is for general informational purposes only and should not be relied upon for making investment decisions. Readers should conduct their own research and consult qualified financial advisors before making any investment decisions. To read our full disclaimer, click here.

U.S. stocks finished mostly higher on Tuesday as a cooler-than-expected inflation report pushed interest rates lower and helped technology and semiconductor stocks recover from Monday’s selloff.

The Nasdaq led the major indexes as investors moved back into semiconductor, memory-chip, and other AI-related stocks. Financial companies also performed well following a generally strong start to bank earnings season.

Inflation Comes In Cooler Than Expected

The most important development of the day was the June Consumer Price Index report. Headline consumer prices fell 0.4% from May, compared with expectations for a smaller 0.1% decline. Lower energy prices were the main reason for the drop.

More importantly, core inflation was essentially unchanged during the month, compared with expectations for a 0.2% increase. Core inflation excludes food and energy because those prices can move sharply from month to month.

On a year-over-year basis:

• Headline inflation slowed to 3.5%

• Core inflation slowed to 2.6%

The Federal Reserve’s long-term inflation target is 2%, so inflation is still above the Fed’s goal. However, Tuesday’s report was encouraging because it showed broad improvement across several important categories. Shelter costs rose only slightly, while prices for used vehicles, clothing, communications services, medical services, and auto insurance declined. The report also suggested that higher energy prices and tariffs have not yet caused a broad new wave of inflation throughout the economy.

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Lower Inflation Pushes Interest Rates Down

Treasury yields fell sharply following the inflation report, particularly on shorter-term government bonds. This matters because recent market concerns had centered on the possibility that the Federal Reserve might raise interest rates again to control inflation. The cooler report reduced the likelihood of an immediate rate increase and gave the Fed more flexibility to remain patient.

Fed Chair Kevin Warsh cautioned investors not to read too much into a single report. He emphasized that inflation remains above the Fed’s goal and that policymakers still have more work to do. The most reasonable takeaway is that today’s report lowers the pressure on the Fed to raise rates at its July meeting, but it does not guarantee that inflation has been fully defeated.

Semiconductor and AI Stocks Rebound

Semiconductor and memory stocks recovered following Monday’s sharp decline. Nvidia was one of the strongest large technology companies, while investors returned to several AI infrastructure names. Much of the recent volatility in these stocks appears to have been driven by trading activity, crowded investor positioning, and profit-taking rather than a major change in the long-term AI demand outlook.

There was also fresh evidence that spending on AI-related infrastructure remains strong:

• Tower Semiconductor announced a major expansion of its silicon photonics production capacity.

• Several data center and power-infrastructure companies advanced.

• Goldman Sachs highlighted a continued multiyear financing opportunity connected to AI investment.

• Bank executives reported strong demand for AI-related capital raising and infrastructure financing.

The long-term AI investment cycle remains intact, but expectations are extremely high. That means these stocks may continue to experience sharp gains and losses even when the underlying business outlook remains positive.

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Bank Earnings Begin on a Strong Note

JPMorgan, Bank of America, Citigroup, Goldman Sachs, and Wells Fargo all reported quarterly results that exceeded overall earnings expectations, although investor reactions varied.

Goldman Sachs was the strongest performer after reporting broad strength in investment banking, bond trading, stock trading, and asset management. JPMorgan also reported strong results, with equities trading performing particularly well. However, investors focused on a higher expense forecast as the bank continues investing in technology, employees, and growth initiatives. Citigroup reported better-than-expected earnings and revenue but declined because management did not raise its profitability target.

The broader message from the banks was still constructive:

• Consumer spending remains healthy

• Credit losses remain manageable

• Investment-banking activity is improving

• Trading activity remains strong

• Demand for AI-related financing is expanding

Bank executives generally described the consumer and the economy as resilient, although they also acknowledged that costs and investment spending remain elevated.

IBM and HCA Weigh on Software and Healthcare

Not all corporate news was positive. IBM fell sharply after warning that second-quarter earnings and revenue would fall short of expectations. The company said some customers were shifting investment away from software and toward servers, storage, and memory equipment before expected price increases. This raised concerns that the AI infrastructure boom may temporarily benefit hardware companies at the expense of some software and consulting providers.

Healthcare stocks also came under pressure after HCA Healthcare lowered its full-year outlook. The hospital operator reported weaker surgical volumes and a less favorable mix of insured and uninsured patients. The announcement weighed on hospitals, medical-device companies, and other healthcare stocks.

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Oil Remains Elevated, but Markets Expect Tensions to Be Contained

Oil prices rose another 1.5%, although they finished well below their highest levels of the day.

Tensions between the United States and Iran remain unsettled, with continued military activity and uncertainty surrounding shipping through the Strait of Hormuz. However, President Trump backed away from his earlier proposal to charge a 20% fee on cargo passing through the region and instead discussed the possibility of future trade and investment arrangements.

Investors continue to assume that the conflict will follow the recent pattern of escalation followed by renewed negotiations. That has helped limit the broader market impact, although oil remains roughly 20% above its recent lows.

The Strait of Hormuz remains the most important risk. A prolonged disruption could push energy prices higher, increase transportation costs, and complicate the inflation outlook.

What Comes Next

Investors will now turn their attention to several additional economic reports and corporate earnings releases.

Wednesday will bring:

• June Producer Price Index

• Federal Reserve’s Beige Book

• A second day of congressional testimony from Fed Chair Warsh

• Comments from several other Fed officials

Later in the week, investors will receive:

• Retail sales

• Manufacturing data

• Pending home sales

• Housing starts and building permits

• Industrial production

• Consumer sentiment

Corporate earnings will also remain important, particularly results from semiconductor and technology companies that can provide more insight into AI demand, memory pricing, and capital spending.

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Here’s Our Take

Today’s market rebound was supported by two important developments: inflation was cooler than expected, and investors regained confidence in the semiconductor and AI infrastructure trade. The inflation report was clearly encouraging. It showed that price pressures eased across a broad range of categories and that the recent increase in energy prices has not yet spread meaningfully throughout the economy. That reduces the likelihood of an immediate interest-rate increase and gives the Federal Reserve more room to wait for additional data.

However, one month does not establish a lasting trend. Core inflation is still running above the Fed’s 2% goal, and energy prices remain vulnerable to events in the Middle East. The Fed is therefore unlikely to declare victory or signal a major policy shift based on this report alone.

The early bank earnings also support the view that the economy remains resilient. Consumers are still spending, credit conditions remain generally stable, and investment-banking activity is improving. These are positive signs as the broader earnings season begins.

At the same time, the IBM and HCA warnings are reminders that the economic environment is not equally favorable for every company. Businesses are shifting spending priorities, higher costs are affecting margins, and changes in consumer and insurance behavior are creating pressure in certain industries.

The AI investment cycle remains one of the strongest drivers of economic and earnings growth, but it is also creating greater differences between winners and losers. Hardware, memory, data centers, power equipment, and capital-markets firms may benefit, while some software and service providers could face spending delays or increased competition.

For long-term investors, today’s developments were broadly constructive. Inflation moved in the right direction, interest-rate pressure eased, and corporate results continue to show underlying economic strength. But elevated valuations, geopolitical uncertainty, and high earnings expectations mean short-term volatility is likely to remain part of the market environment.

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DISCLAIMER: The content provided in this newsletter does not constitute investment advice, financial advice, trading advice, or any other form of personal recommendation. Nothing in this newsletter should be interpreted as a suggestion to buy, sell, or hold any investment or security. All content is for general informational purposes only and should not be relied upon for making investment decisions. Readers should conduct their own research and consult qualified financial advisors before making any investment decisions. To read our full disclaimer, click here.

Stocks finished lower on today, led by a sharp pullback in semiconductor, memory-chip, and other high-growth technology stocks. Investors also reacted to renewed tensions between the United States and Iran, which sent oil prices sharply higher and pushed bond yields up.

Although the major indexes declined, the weakness was not as broad as the headline numbers might suggest. The equal-weighted S&P 500, which gives every company the same importance, performed considerably better than the traditional S&P 500. This indicates that much of Monday’s decline was concentrated in a relatively small group of large technology and AI-related companies.

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AI and Semiconductor Stocks Pull Back Again

The biggest source of market weakness was another selloff in semiconductor and memory stocks. Companies connected to the AI infrastructure boom have experienced enormous gains over the past several months. That has left many of these stocks heavily owned and vulnerable to sudden bouts of profit-taking.

Today’s decline did not appear to be driven by a major deterioration in the long-term AI outlook. Instead, investors were focused on technical and trading-related concerns, including:

• Crowded investor positioning

• Heavy use of leveraged investment products

• Seasonal market patterns

• Concerns that expectations for upcoming semiconductor earnings may be too high

• Questions about memory-chip pricing and product mix

Nvidia, Tesla, SpaceX, and several other market favorites declined, while semiconductor and memory stocks were among the day’s weakest groups. There were also some positive industry developments. Taiwan Semiconductor reported a 68% increase in June sales from a year ago, while Meta announced another major expansion of its Louisiana data center project. These developments suggest that demand for AI computing infrastructure remains strong, even as related stocks experience greater volatility.

Oil Jumps as U.S.-Iran Tensions Escalate

Oil prices surged more than 9% after President Trump announced that the United States was reinstating a blockade affecting Iranian vessels and would seek reimbursement equal to 20% of cargo shipped through the Strait of Hormuz.

The Strait of Hormuz is one of the world’s most important energy shipping routes. Any disruption, or added cost for vessels traveling through it, can increase the price of transporting oil and other goods around the world.

The latest developments follow additional attacks on commercial vessels and renewed military strikes between the United States and Iran. Iran has insisted that it should retain some control over the strait, while the United States has maintained that the waterway must remain open to international shipping.

Investors have seen several cycles of escalation followed by renewed negotiations during the past few months. As a result, markets are not yet assuming that a full-scale war is inevitable. However, the lack of an obvious diplomatic solution means oil prices and markets may remain sensitive to each new headline.

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Higher Oil Prices Push Interest Rates Up

Treasury yields also moved higher on today. Rising oil prices can contribute to inflation by increasing fuel, transportation, manufacturing, and shipping costs. That makes it more difficult for the Federal Reserve to lower interest rates and raises the possibility that it may need to keep rates elevated or even increase them again.

Federal Reserve Governor Christopher Waller said rates could remain unchanged if inflation continues to ease. However, he also warned that the Fed may need to consider tightening policy if upcoming inflation reports are stronger than expected.

Those comments added importance to Tuesday morning’s Consumer Price Index report, which will provide the latest reading on inflation.

Investors Prepare for Inflation Data and Bank Earnings

This will be a busy week for both the economy and corporate earnings.

Tuesday will bring:

• The June Consumer Price Index

• Federal Reserve Chair Kevin Warsh’s congressional testimony

• Earnings from JPMorgan, Bank of America, Citigroup, Goldman Sachs, and Wells Fargo

Investors will be looking for signs that inflation continues to cool, particularly outside of energy. The current expectation is that core inflation, which excludes food and energy, rose approximately 0.2% during June.

Bank earnings will also offer insight into the broader economy. Investors will be paying attention to:

• Consumer and business borrowing

• Credit-card and loan losses

• Investment-banking activity

• Trading revenue

• Deposit competition

• Management commentary about the economic outlook

Expectations for bank earnings are relatively high following strong stock-market activity, increased merger and acquisition activity, and a surge in corporate debt and stock offerings.

Market Leadership Remains More Balanced Than It Appears

Despite today’s weakness, several defensive and value-oriented areas performed relatively well.

Stronger groups included:

• Energy companies

• Insurance companies

• Managed-care providers

• Railroads

• Steel and chemical companies

• Dollar stores

• Food companies

• Media and telecommunications firms

Software stocks also held up better than semiconductor and hardware companies.

This suggests investors were not abandoning the market altogether. Instead, money was being moved away from some of the strongest recent performers and into less expensive or more defensive areas.

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Here’s Our Take

Today’s decline looked more like another rotation away from highly crowded AI and semiconductor trades than the beginning of a broad market breakdown. The long-term AI investment story remains supported by strong spending from companies such as Meta, continued sales growth at Taiwan Semiconductor, and large investments in data centers and computing capacity. However, expectations have become extremely high, and that makes AI-related stocks more vulnerable to sudden declines whenever investors become concerned about valuations, earnings, or positioning.

The more immediate concern is the renewed rise in oil prices. Higher oil prices act like an additional tax on consumers and businesses. They raise transportation and production costs, pressure household budgets, and make the Federal Reserve’s inflation problem more difficult. If oil remains elevated, it could delay interest-rate relief and put pressure on economically sensitive areas of the market.

Tuesday’s inflation report will therefore be especially important. A relatively calm core-inflation reading could reassure investors that energy pressures have not yet spread throughout the economy. A hotter reading, however, could strengthen the case for higher interest rates and create additional volatility.

The start of earnings season will also shift the market’s focus from headlines and expectations toward actual corporate results. Earnings growth is expected to remain strong, but investors will want to see that companies can justify today’s elevated valuations and continue producing healthy profits despite higher costs and interest rates.

For long-term investors, the broader environment remains mixed but still constructive. Economic growth remains positive, corporate earnings are expected to rise, and investment in technology continues. At the same time, geopolitical risks, inflation, and high expectations mean investors should be prepared for larger short-term swings and greater differences in performance between individual sectors and companies.

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DISCLAIMER: The content provided in this newsletter does not constitute investment advice, financial advice, trading advice, or any other form of personal recommendation. Nothing in this newsletter should be interpreted as a suggestion to buy, sell, or hold any investment or security. All content is for general informational purposes only and should not be relied upon for making investment decisions. Readers should conduct their own research and consult qualified financial advisors before making any investment decisions. To read our full disclaimer, click here.

Stocks closed mostly higher on today, capping another positive week for the S&P 500 and Nasdaq. Trading was relatively quiet as investors looked ahead to what could be one of the most important weeks of the summer, with inflation data, major bank earnings, retail sales, and testimony from Federal Reserve Chair Kevin Warsh all on the calendar.

Today’s session didn’t feature any major economic reports or market-moving headlines, but investors remained optimistic.

Rather than chasing the biggest technology stocks, money continued flowing into a broader mix of companies, including:

• Banks

• Homebuilders

• Machinery and industrial companies

• Retailers

• Consumer discretionary businesses

This broader participation has been a healthy trend over the past several weeks, suggesting the rally is no longer being driven solely by a handful of AI-related companies.

AI Investment Story Remains Intact

While semiconductor stocks were mixed Friday, the overall AI theme continues to support markets.

Several developments reinforced the long-term investment case:

• Meta received positive reviews for its latest AI model, with analysts suggesting it is becoming one of the strongest competitors in advanced artificial intelligence.

• Investors continue to digest Meta’s plans to significantly expand its AI computing capacity over the next two years.

• SK Hynix completed one of the largest U.S. stock offerings ever, raising more than $26 billion, with demand from investors exceeding expectations.

Although AI stocks have been volatile recently, there is still little evidence that companies are slowing their investments in AI infrastructure.

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Earnings Season Begins Next Week

Attention is now shifting toward second-quarter earnings season, which begins next week with several of the nation’s largest banks.

Investors will be watching for answers to several important questions:

• Are consumers still spending?

• Are businesses continuing to invest?

• How are companies dealing with inflation and higher interest rates?

• Most importantly, what do executives expect for the rest of 2026?

Expectations remain high, particularly for companies benefiting from AI investment. That also means companies may need to deliver exceptionally strong results to keep their stocks moving higher.

Economy Continues to Look Steady

There was little new economic data on Friday, but the broader picture remains largely unchanged.

Recent reports continue to suggest:

• The labor market remains healthy.

• Inflation is gradually moving lower, although it remains above the Federal Reserve’s target.

• Consumer spending has slowed somewhat but remains resilient.

Meanwhile, oil prices declined again despite ongoing tensions in the Middle East, suggesting investors believe disruptions to global energy supplies are likely to remain limited for now.

Looking Ahead

Next week will likely set the tone for markets during the rest of the summer.

Key events include:

• Tuesday: Consumer Price Index (CPI)

• Wednesday: Producer Price Index (PPI) and Federal Reserve Chair Warsh’s Congressional testimony

• Thursday: Retail Sales, housing data, and the start of earnings season with several major banks

Together, these reports should provide a much clearer picture of inflation, consumer health, corporate profitability, and the outlook for interest rates.

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Here’s Our Take

This week’s trading reinforced several themes that have been developing over the past month. First, the market has shown impressive resilience. Despite geopolitical tensions, higher interest rates, and periodic volatility in AI stocks, investors have continued buying equities, particularly outside of the largest technology companies. That broadening of market leadership is generally a constructive sign for the overall market.

Second, the long-term AI investment story remains firmly intact. While individual AI stocks may continue to experience sharp swings as investors debate valuations and spending levels, there is little evidence that businesses are reducing their investments in artificial intelligence. In fact, this week’s announcements suggest many companies are accelerating those investments.

Finally, next week represents an important reality check. Inflation data, consumer spending, and the first wave of corporate earnings will help determine whether the strong optimism currently reflected in stock prices is justified. Expectations are high, which means markets could become more volatile as companies begin reporting results. For long-term investors, however, the bigger picture remains encouraging. Economic growth has slowed but remains positive, employment is healthy, corporate profits are expected to continue growing, and innovation, particularly around AI, continues to drive investment across many industries. Those fundamentals remain supportive, even if markets experience short-term swings along the way.

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DISCLAIMER: The content provided in this newsletter does not constitute investment advice, financial advice, trading advice, or any other form of personal recommendation. Nothing in this newsletter should be interpreted as a suggestion to buy, sell, or hold any investment or security. All content is for general informational purposes only and should not be relied upon for making investment decisions. Readers should conduct their own research and consult qualified financial advisors before making any investment decisions. To read our full disclaimer, click here.

U.S. stocks moved higher today as investors grew more optimistic about artificial intelligence spending, easing concerns in the Middle East, and the start of earnings season next week. Technology shares led the way, but unlike recent rallies, gains were broad-based across much of the market.

AI Stocks Lead Another Strong Day

The biggest driver of today’s rally was renewed confidence in the AI investment story.

Semiconductor stocks continued to recover after their recent pullback, helped by several positive developments:

• Meta reportedly plans to begin production of a new AI chip later this year and intends to double its computing capacity by next year.

• Micron announced it is increasing its planned U.S. manufacturing investments to $250 billion through 2035, underscoring the industry’s confidence in long-term demand.

• Applied Materials’ CEO said he sees strong demand for semiconductor equipment over at least the next two years.

These announcements reassured investors that companies remain committed to investing heavily in AI infrastructure despite recent concerns about whether spending had become excessive.

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Market Rally Broadens Beyond Technology

Unlike some recent sessions that were driven almost entirely by technology stocks, today’s gains spread across many areas of the market.

Banks, homebuilders, transportation companies, retailers, restaurants, cruise lines, and small-cap stocks all posted solid gains.

This is encouraging because healthy bull markets typically expand beyond just a handful of large technology companies. Investors appear increasingly willing to buy a broader range of businesses as confidence in the economy remains intact.

Oil Prices Fall as Geopolitical Fears Ease

Oil prices declined about 2%, giving back part of Wednesday’s sharp increase.

Although tensions between the U.S. and Iran remain elevated, investors appear to believe the conflict is unlikely to escalate into a broader regional war. Diplomatic discussions are continuing, and markets are becoming more comfortable that energy supplies will remain largely uninterrupted.

Lower oil prices also helped ease inflation concerns and contributed to lower Treasury yields, both of which supported stocks.

Mixed Signals from Consumers

Several well-known consumer companies reported earnings today.

Levi Strauss delivered better-than-expected results, raised its outlook, and spoke positively about consumer demand, suggesting shoppers continue spending despite economic uncertainty.

On the other hand, PepsiCo reported softer sales in North America, noting that many consumers remain budget-conscious and continue looking for ways to save money.

Taken together, these reports reinforce a familiar theme: consumers are still spending, but they are becoming increasingly selective about where they spend their money.

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Economic Data Remains Steady

Today’s economic reports painted a picture of an economy that continues to slow gradually, but not dramatically.

• Weekly unemployment claims remained low, suggesting layoffs are still limited.

• Existing home sales fell more than expected, reflecting ongoing affordability challenges as mortgage rates remain elevated.

• Treasury yields moved slightly lower after strong demand for long-term government bonds.

Attention now shifts to next week’s important economic reports, including:

• Consumer Price Index (CPI)

• Producer Price Index (PPI)

• Retail Sales

• Congressional testimony from Federal Reserve Chair Kevin Warsh

These reports should provide a clearer picture of inflation and consumer spending heading into the second half of the year.

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Here’s Our Take

Today’s rally was encouraging because it wasn’t driven by just one theme. AI remains an important engine for market growth, but today’s gains also spread across financials, industrials, housing, transportation, and small-cap companies. That broader participation suggests investor confidence remains reasonably healthy despite recent geopolitical headlines and higher interest rates.

Perhaps most importantly, the market appears increasingly comfortable separating short-term geopolitical events from the longer-term economic outlook. While tensions in the Middle East remain a risk worth monitoring, investors are focusing more on corporate earnings, economic fundamentals, and the outlook for AI investment.

Next week marks the unofficial start of second-quarter earnings season, and that will likely become the market’s primary focus. Companies will not only report how they performed over the past three months but, more importantly, provide guidance on what they expect for the remainder of the year. Those outlooks will help investors determine whether current market valuations remain justified.

For long-term investors, the overall picture has changed very little. Economic growth continues, the labor market remains resilient, inflation is gradually easing, and businesses continue investing heavily in technologies they believe will drive future productivity. While markets will undoubtedly remain volatile, those fundamentals continue to provide a constructive backdrop.

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DISCLAIMER: The content provided in this newsletter does not constitute investment advice, financial advice, trading advice, or any other form of personal recommendation. Nothing in this newsletter should be interpreted as a suggestion to buy, sell, or hold any investment or security. All content is for general informational purposes only and should not be relied upon for making investment decisions. Readers should conduct their own research and consult qualified financial advisors before making any investment decisions. To read our full disclaimer, click here.

U.S. stocks finished mostly lower today as renewed tensions in the Middle East made investors more cautious. Higher oil prices and rising Treasury yields weighed on much of the market, although semiconductor stocks stabilized after several difficult trading sessions.

Geopolitics Took Center Stage

The biggest story today wasn’t earnings or economic data, it was geopolitics. Markets reacted after the U.S. retaliated against Iran following recent attacks on commercial ships in the Strait of Hormuz. President Trump indicated the previous ceasefire agreement was effectively over, while Iran threatened additional retaliation and again raised the possibility of disrupting shipping through the Strait of Hormuz.

Those headlines pushed oil prices up more than 4%, as investors worried about potential disruptions to global energy supplies. Despite the market’s initial reaction, investors have become somewhat accustomed to this pattern over the past several months, periods of escalation followed by renewed diplomatic efforts. As a result, markets recovered some of their losses by the close.

AI Stocks Stabilize After Recent Selling

After nearly two weeks of heavy selling, semiconductor and AI-related stocks finally found some stability.

NVIDIA and Broadcom both moved higher, helped by several positive developments:

• NVIDIA may receive approval to resume limited sales of certain AI chips in China.

• Apple signed a new $30+ billion long-term agreement with Broadcom to develop custom chips in the United States.

• AI infrastructure company Penguin Solutions surged after reporting strong demand tied to AI computing.

While AI stocks remain volatile, today’s trading suggested investors may be becoming more selective rather than broadly selling the entire sector.

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Fed Minutes Offered Few Surprises

The Federal Reserve released the minutes from its June policy meeting.

The main takeaway was that policymakers remain divided about where interest rates should go next.

• Some officials still believe inflation could remain stubborn enough to require another rate hike.

• Others believe inflation will continue cooling, allowing rates to stay where they are or eventually move lower.

Importantly, most Fed officials agreed that the labor market is no longer a major source of inflation pressure and that economic growth remains healthy.

In other words, the Fed is still taking a “wait-and-see” approach.

Bond Yields Rise Despite Strong Treasury Demand

Treasury yields moved higher again Wednesday, even though demand for the government’s 10-year Treasury auction was quite strong.

Investors continue to wrestle with competing forces:

• Higher oil prices could push inflation higher.

• The economy remains resilient.

• The labor market is gradually cooling.

• The Fed remains cautious about declaring victory over inflation.

This uncertainty continues to keep interest rates elevated.

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Looking Ahead

Tomorrow brings several important updates, including:

• Weekly unemployment claims

• Existing home sales

• Additional comments from Federal Reserve officials

Investors will also continue watching developments in the Middle East, particularly whether tensions remain contained or begin affecting global energy supplies.

Here’s Our Take

Today’s market weakness appeared to be driven more by geopolitical uncertainty than by deteriorating economic fundamentals. While headlines surrounding Iran understandably made investors nervous, the broader market reaction remained relatively measured. Markets have increasingly learned to distinguish between temporary geopolitical shocks and events that materially change the long-term economic outlook.

Encouragingly, the AI sector showed signs of stabilizing after its recent correction. Rather than abandoning technology altogether, investors appear to be becoming more selective, rewarding companies that continue to demonstrate strong demand and attractive long-term opportunities.

The Federal Reserve minutes also reinforced what investors already suspected: policymakers remain data-dependent. Inflation is still above target, but the labor market has cooled enough that the Fed does not appear under immediate pressure to raise rates again. As earnings season begins next week, corporate results and management outlooks will likely become a much bigger driver of markets than daily geopolitical headlines. Investors will be looking to see whether strong profit growth, particularly from AI-related companies, continues to justify current market valuations.

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Stocks finished lower today, with another round of selling in semiconductor and AI-related stocks weighing on the major indexes. Despite the headline declines, the broader market held up better than it appeared, with more S&P 500 stocks advancing than declining.

AI and Semiconductor Stocks Lead the Decline

The biggest story was another pullback in semiconductor, memory, and AI infrastructure stocks. This follows their enormous gains earlier this year and appears to be driven more by investors taking profits and repositioning than by any major change in the long-term AI outlook.

Several factors contributed to today’s weakness:

• Concerns that Chinese companies are accelerating development of their own AI chips.

• Samsung shares fell despite reporting very strong earnings, highlighting how high investor expectations have become.

• Investors continue to debate whether AI infrastructure spending can remain at today’s extraordinary pace.

Rotation Continues Across the Market

While AI-related stocks struggled, investors rotated into more defensive sectors.

Healthcare was one of the strongest performers, helped by another large pharmaceutical acquisition. Energy stocks also gained as oil prices moved higher following renewed tensions involving shipping in the Strait of Hormuz.

Software companies generally held up well, and Meta was one of the brighter spots after announcing its new AI image-generation model, Muse, which will be integrated into Instagram, WhatsApp, Facebook, and other Meta platforms.

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Interest Rates Move Higher Again

Treasury yields climbed across the curve, with the 10-year Treasury moving back above 4.5%.

One reason was higher oil prices after reports of additional attacks on commercial ships near the Strait of Hormuz. Investors also continue to expect the Federal Reserve to keep interest rates elevated until inflation is clearly moving back toward its target.

Inflation Expectations Tick Higher

The New York Fed’s latest consumer survey showed Americans expect inflation to remain somewhat higher over the next year.

The encouraging news is that consumers also felt slightly better about the job market and their own financial situation, suggesting households remain relatively resilient despite higher prices.

Earnings Season Is Almost Here

Investors are increasingly shifting their attention toward second-quarter earnings, which begin in earnest next week.

Expectations remain very high. Analysts are forecasting another quarter of roughly 20% year-over-year earnings growth for the S&P 500, driven largely by continued investment in AI infrastructure.

That means companies will need to deliver strong results to justify today’s elevated stock valuations.

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Here’s Our Take

Today’s decline looked more like another rotation than the start of a broad market selloff. The AI trade continues to experience periods of volatility after its tremendous run over the past year. Expectations are extremely high, so even strong news has not always been enough to push semiconductor stocks higher.

At the same time, the broader market continues to show encouraging signs. Healthcare, energy, software, and other sectors attracted buying interest, suggesting investors are becoming more diversified rather than simply exiting equities altogether.

The next major catalyst will likely be tomorrow’s Federal Reserve meeting minutes, followed by the start of earnings season next week. Investors will be looking for confirmation that corporate profits can continue supporting current market valuations.

Overall, the market remains constructive, but leadership continues to rotate. Rather than one group carrying the market, investors are increasingly rewarding companies with strong fundamentals across a wider range of sectors—a healthy development for the market over the long run.

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U.S. stocks finished higher to start the week, led by another rebound in AI-related stocks.

The biggest story was a rebound in semiconductor, memory, and AI infrastructure stocks after last week’s pullback. Investors appeared willing to step back into the AI trade, helped by continued optimism around data centers and long-term AI demand.

TeraWulf rose after announcing a major long-term lease agreement with Anthropic, reinforcing the idea that AI companies still need massive computing capacity.

Broader Market Took a Breather

While the headline indexes rose, the rally was not especially broad. The equal-weighted S&P 500 lagged the regular S&P 500, meaning the largest companies were doing more of the work today.

Financials, machinery, autos, and tech hardware were stronger, while healthcare, homebuilders, restaurants, staples, and utilities were weaker.

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Economic Data Was Steady

The services side of the economy continued to grow, though at a slightly slower pace. Encouragingly, employment in the services report moved back into expansion, and price pressures cooled somewhat.

That gives investors some comfort that the economy is still holding up, while inflation pressure may be easing at the margin.

Rates Moved Lower

Treasury yields fell at the short end of the curve, which helped support growth stocks. Investors are still watching the Fed closely, especially after recent debate around whether inflation risks could force more rate hikes later this year.

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Here’s Our Take

Today’s move was really about the AI trade finding its footing again. After a sharp pullback in semiconductors, investors bought the dip, especially in companies tied to AI infrastructure and memory demand.

That said, the market still looks selective. The biggest indexes were higher, but leadership was concentrated in large tech and AI-related areas. The broader market was more mixed.

For now, the backdrop remains constructive: the economy is still growing, inflation pressure is not worsening, and earnings season is approaching with high expectations. But the market will need strong Q2 earnings to justify the recent rally, especially in AI-related stocks.

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Stocks finished mixed ahead of the long holiday weekend. The Dow rose, the S&P 500 was flat, and the Nasdaq declined as weakness in big tech and semiconductors weighed on the headline indexes.

AI Momentum Cools Again

Semiconductor and memory stocks continued to pull back after a huge second-quarter rally. Investors are questioning whether the AI trade had become too crowded, and whether rising memory costs could pressure companies like Apple and other hardware makers.

Tesla and Meta were also notable drags on the market.

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Broader Market Still Looks Healthier

Even though the Nasdaq was weaker, the equal-weighted S&P 500 outperformed and hit a new high. That means the average stock did better than the big headline indexes suggest.

Healthcare, insurance, payments, defense, utilities, energy, and consumer staples were among the stronger areas.

Jobs Report Was Softer

The June jobs report showed only 57,000 jobs added, well below expectations. May was also revised lower. The unemployment rate dipped to 4.2%, but that was partly because fewer people were participating in the labor force.

In plain English: the labor market is still okay, but it is clearly cooling.

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Inflation and Fed Concerns Ease a Bit

Short-term Treasury yields moved lower after the softer jobs report, reducing some fear that the Fed may need to raise rates aggressively. Still, investors remain focused on whether inflation stays sticky and whether the Fed stays hawkish.

Here’s Our Take

Today’s market was mixed, but not weak across the board. The main pressure came from crowded AI and semiconductor trades cooling off after a huge run.

The softer jobs report may actually help markets in the near term because it reduces pressure on the Fed to keep tightening. But if job growth keeps slowing, investors will eventually worry more about the economy.

Overall, the market remains constructive, but leadership is rotating. AI is still important, but investors are beginning to reward a broader set of companies.

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U.S. stocks finished modestly lower today, with weakness concentrated in the semiconductor and AI momentum trade. The broader market actually looked healthier beneath the surface, with more stocks rising than falling and the equal-weighted S&P 500 setting a new high.

AI Momentum Takes a Breather

Semiconductor and memory stocks pulled back after an extremely strong second quarter. This looked more like profit-taking after a huge run than a change in the long-term AI story.

At the same time, other parts of technology did well. Meta jumped after reports that it may sell excess AI computing capacity, while software stocks also had a strong day.

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Rotation Beneath the Surface

While semis struggled, investors moved into other areas, including financials, healthcare, food, apparel, restaurants, and media. Nike gained after better-than-feared results, and General Mills rose after beating expectations and showing margin improvement.

This rotation is important because it shows the market is not only relying on one group of stocks, even though AI remains the dominant theme.

Economic Data Was Mixed but Still Supportive

Manufacturing activity slowed slightly in June, but remained in expansion. A key positive was that prices paid by manufacturers dropped sharply, suggesting some inflation pressure may be easing.

Private payrolls rose by 98,000 in June, below expectations and slower than May. That makes Thursday’s official jobs report more important. Investors are looking for a solid-but-not-too-hot number that shows the economy is holding up without forcing the Fed to raise rates more aggressively.

Fed and Rates Still Matter

Fed Chair Warsh did not say much new at the ECB conference, but he noted that inflation risks have come down. Treasury yields still moved higher, continuing to remind investors that interest rates remain a major market driver.

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Here’s Our Take

Today was less about broad market weakness and more about rotation. Semiconductors and memory stocks cooled off after a historic rally, but the broader market held up reasonably well.

The good news is that leadership is showing signs of broadening beyond AI into financials, healthcare, consumer names, and software. The caution is that AI-related stocks have run very hard, and expectations are now extremely high heading into earnings season.

Tomorrow’s jobs report will be important. A moderate employment number could reassure investors that the economy remains healthy while inflation pressures continue to ease. A much stronger number could revive concerns that the Fed may need to stay hawkish for longer. Overall, the market still looks constructive, but after such a strong quarter, investors are becoming more selective.

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DISCLAIMER: The content provided in this newsletter does not constitute investment advice, financial advice, trading advice, or any other form of personal recommendation. Nothing in this newsletter should be interpreted as a suggestion to buy, sell, or hold any investment or security. All content is for general informational purposes only and should not be relied upon for making investment decisions. Readers should conduct their own research and consult qualified financial advisors before making any investment decisions. To read our full disclaimer, click here.