U.S. stocks gain as chip rebound helps offset Middle East risk
Investors are pushing major equity indexes higher as semiconductor shares rebound and ease some of the pressure from shifting U.S.-Iran truce headlines. The move is helping markets look past fears that renewed hostilities could keep inflation risks elevated through energy prices.
Highlights
- Semiconductor stocks climb 3.1%, leading the Nasdaq higher and helping seven of eleven S&P 500 sectors end positive despite Middle East tensions.
- WTI and Brent crude fall 2.0% and 2.2% respectively, reducing immediate inflation concerns even as gold rises over 1% on safe-haven demand.
- Morgan Stanley reports U.S. equity repo financing costs surged 200 basis points above the fed funds rate on June 26, the highest since December 2024, as leverage demand increases.
Chip rally drives broader market move
As reported by Reuters, the Nasdaq leads major U.S. indexes higher on Thursday as a rebound in chipmakers lifts risk appetite despite continued tension in the Middle East.Seven of the 11 main S&P 500 sectors finish in positive territory, led by technology shares, while consumer staples lag. Semiconductor stocks gain 3.1%, and Europe’s STOXX 600 rises for the first session in four.
The dollar edges lower as jobs data remain stable and geopolitical concerns persist. In fixed income, U.S. Treasury yields fall as bonds recover after a recent selloff.
Oil pullback tempers inflation concerns
Front-month WTI and Brent crude settle down 2.0% and 2.2% respectively, a move that helps contain immediate worries that Middle East conflict could feed longer-term inflation. Gold rises more than 1%, reflecting continuing demand for defensive assets even as equities advance.Markets are also watching signs of renewed funding pressure in U.S. equity finance. According to Morgan Stanley data cited in the report, the cost of financing equity positions in the repo market climbed 200 basis points above the federal funds rate on June 26, the highest level since December 2024, as elevated stock prices and heavy demand for popular technology shares increase leverage demand.
Investors now turn to fresh catalysts including developments in the Middle East, energy market moves and a broad set of inflation and output data from Europe, Brazil, Canada and Russia.
Our earlier report on strains in the U.S. equity repo market explained how a late-June spike in short-term borrowing costs signaled renewed funding pressure as investors sought leveraged exposure near record equity levels. We noted that heavy demand for tech and semiconductor trades, along with growing use of leveraged ETFs, is increasing balance-sheet dependence and could make quarter-end periods vulnerable to another jump in financing costs.
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