U.S. stock indexes edged higher on the day, with the S&P 500 up around 0.2% and closing in on a three-week high as investors weighed a relatively calmer geopolitical tone against a softer patch in semiconductors and AI infrastructure names. The Dow added roughly 0.1%, while the Nasdaq 100 rose less than 0.1% as chip-related stocks lagged.
Oil moved lower, helping to cushion energy-sensitive sentiment, while markets also looked ahead to the start of second-quarter earnings next week. Separately, traders continued to price the next Federal Reserve decision, and Treasury yields and European bond rates drifted lower amid a mix of safe-haven demand and positioning ahead of new government supply.
Key takeaways
- Index performance: The S&P 500 rose about 0.2%, the Dow gained around 0.1%, and the Nasdaq 100 eked out a small increase.
- Catalyst: Lower crude oil prices followed renewed expectations of ongoing U.S.-Iran discussions, while investors also looked to upcoming earnings growth.
- Market implication: Weakness concentrated in chips and AI infrastructure limited broader upside and kept gains modest.
- Rates backdrop: U.S. Treasury yields slipped and European government bond yields eased as safe-haven demand showed up alongside hedging flows.
- Stock-level signals: Individual company updates and analyst actions drove outsized moves in sectors outside semiconductors.
What drove the move
Stocks found support from energy after crude oil fell, as reports and comments suggested diplomacy could remain in focus even amid heightened tensions earlier in the week. According to the article, discussions between the U.S. and Iran on a peace agreement were expected to continue despite the hostilities this week, which had sharply reduced traffic through the Strait of Hormuz. WTI crude was down roughly 0.5% on the session after an American official said talks for a permanent deal were continuing, and after a report from Al Jazeera indicated Qatar supports efforts to defuse U.S.-Iran tensions.
At the same time, the broader tape remained restrained because leadership was mixed. The report said weakness in chipmakers and AI infrastructure names weighed on sentiment, pulling back Nasdaq exposure even as defensive positioning in rates helped stabilize parts of the market.
Earnings expectations and the stock-level picture
The main medium-term support came from expectations for strong second-quarter earnings. According to the report, Bloomberg Intelligence forecasts pointed to Q2 earnings rising about 23%, which would be near the prior quarter’s strong results after Q1’s blowout earnings growth of about 30%. The article also said AI spending is expected to account for most of the earnings profile, with AI infrastructure stocks set to contribute nearly 60% of the S&P 500’s earnings-per-share growth in Q2.
Despite that earnings optimism, the day’s market action showed investors were still willing to sell parts of the AI supply chain. The report highlighted broad declines among semiconductor and AI infrastructure names, noting the iShares Semiconductor ETF fell about 1% and that several large-chip and equipment-related companies were down between roughly 1% and 3% or more.
Meanwhile, there were notable upside outliers driven by company-specific catalysts and Wall Street revisions. The report said WD-40 shares jumped more than 20% after the company raised its full-year net sales forecast to a higher range. EquipmentShare shares gained more than 15% after lifting its full-year adjusted core EBITDA estimate and announcing a $500 million share buyback program.
Other single-name movers included Jackson Financial, up more than 10% after an upgrade to buy from hold, and Circle Internet Group, higher after receiving approval from the U.S. Comptroller of the Currency to establish a “First National Digital Currency Bank.” In the mega-cap complex, Meta Platforms led gainers in the S&P 500 and Nasdaq 100 after a report by SemiAnalysis was described as positive for the company’s AI compute business.
On the downside, the report pointed to Netflix sliding more than 3% after the Wall Street Journal reported the company was considering steps to address declining signs of subscriber engagement. Delta Air Lines was also lower after the report said Q2 passenger revenue came in slightly below consensus.
Rates and global market signals
In the bond market, the article said U.S. 10-year Treasury notes were slightly higher on the day, with the 10-year yield down about two basis points to 4.549%. The report attributed the move to weaker stock performance increasing demand for Treasuries, alongside short covering by dealers ahead of a new Treasury supply of $119 billion in 10-year notes and Treasury bonds.
Across Europe, the report said 10-year German bund and UK gilt yields declined as well. It also cited weaker Italian industrial production as part of the macro backdrop, with May industrial production falling by 0.3% month over month.
Futures pricing for central bank decisions remained in focus. The article said markets were discounting a 24% chance of a 25 basis point rate hike at the next FOMC meeting on July 28–29, and that swaps were pricing a 12% chance of a 25 basis point ECB hike at the ECB’s next policy meeting on July 23.
What to watch next
With earnings set to begin next week, investors will likely focus on whether company results—especially among firms tied to AI spending—support the earnings-growth expectations highlighted by Bloomberg Intelligence. Traders will also watch for further developments in U.S.-Iran diplomacy that could influence energy prices, alongside any incremental signals from central bank pricing and bond-market positioning as Treasury issuance continues.
