A surge in microchip stocks gave U.S. investors something to cheer about Thursday, helping Wall Street push past mounting tensions in the Middle East and concerns that renewed hostilities could stoke inflation down the road.
Here are the major stories shaping markets right now:
Iran struck back overnight, hitting U.S. targets in Kuwait and Bahrain after President Donald Trump declared that an interim deal to end the conflict was finished. Pre-owned home sales in the U.S. dropped unexpectedly in June. Democratic Senate hopeful Graham Planter of Maine stepped back from his campaign after facing a sexual assault allegation. Meta plans to begin producing its own AI chip in September as part of an effort to grow its total computing capacity to 14 gigawatts by next year, according to an internal memo obtained by Reuters. South Korean chip manufacturer SK Hynix is looking to price its U.S.-listed shares at $149, a move that would raise roughly $26.5 billion. And Mexican President Claudia Sheinbaum announced her government intends to file criminal complaints in the United States over Mexican citizens who died while in immigration custody or during anti-immigration operations.
Thursday’s Market Snapshot
The Nasdaq led all major U.S. stock indexes upward, powered by the chip sector’s comeback, while Europe’s STOXX 600 snapped a three-session losing streak with a gain of its own. Seven of the 11 major S&P 500 sectors finished in positive territory, with technology shares out front and consumer staples bringing up the rear. Chip stocks overall climbed 3.1%. The U.S. dollar slipped amid steady jobs figures and rising U.S.-Iran tensions. Treasury bond yields declined as investors moved back into bonds following a recent selloff. On the energy front, front-month WTI crude settled down 2.0% and Brent crude fell 2.2%, while gold climbed more than 1%.
Key Themes to Watch
U.S. equity funding markets remain under pressure following a spike in short-term borrowing costs last month. Near-record stock valuations and heavy demand for popular technology shares are driving up the need for borrowed money. The concern is centered on the equity repo market — where investors pledge stock holdings in exchange for short-term cash. Around the end of the April-June quarter, the cost of financing those positions jumped 200 basis points above the federal funds rate on June 26, the highest level since December 2024, according to Morgan Stanley data.
The cancellation of a federal food security survey is raising alarms about the country’s ability to track hunger. The survey, which was ended last year, had most recently found that 13.7% of U.S. households were food insecure — a 10-year high. Without it, experts say it will be nearly impossible to gauge whether cuts to the food stamp program have worsened hunger, especially among children.
Despite President Trump’s push for peace, sources close to the Kremlin say Russian President Vladimir Putin is likely to escalate the war in Ukraine rather than negotiate. Ukraine’s recent drone attacks on Russian oil refineries and ports have reportedly hardened Putin’s position. Three sources, speaking anonymously, said there is a “high probability” of escalation in the months ahead — a stark contrast to Trump’s claim Monday that Putin wanted the war to end and that a resolution was “closer than people realize.”
What Could Move Markets Friday
Traders will be watching for any new developments in the Middle East, shifts in energy markets, and social media activity from President Trump. Economic data releases from several European countries — including Germany, France, Norway, Denmark, the Czech Republic, Italy, and Portugal — are also on the calendar, along with inflation figures from Brazil and Russia and Canada’s June employment report.
