AI Rally and Iran-Driven Oil Shock: Wall Street's Choice

On the 21st (local time), the New York stock market resumed a clear uptrend for the first time in four days, powered by a sharp rebound in semiconductor and AI stocks. The S&P 500 rose 0.9% to 7,509.20, the Dow climbed 0.7%, and the Nasdaq jumped 1.3%. The small-cap–focused Russell 2000 also gained 1.5%, reflecting a revival of risk-asset appetite. It was a day without major economic data releases, but the AI theme appears to have reclaimed leadership after last week’s pullback.

It wasn’t macro indicators but individual companies and sectors that determined the market’s direction. Micron surged over 12% on expectations of improved memory supply and demand after Q2, and Nvidia also rose 2%, making it one of the top contributors to the S&P 500’s gain. Investors are selectively betting on AI infrastructure and semiconductor stocks with high earnings expectations ahead of big-tech results later this week from Alphabet, Tesla, AMD, Apple, and others. Overall, with valuations now elevated, the view is strengthening that earnings and guidance will be the key variables determining whether the rally can continue.

Global issues still pose upside risks. With U.S. airstrikes on Iran entering their tenth day, Brent crude has surged from below $72 per barrel earlier this month to around $92. Concerns over high oil prices have pushed U.S. Treasury yields higher again, but today, strength in energy and defense stocks—alongside the AI rally—overwhelmed the rate burden. The Fed held a private board meeting but did not signal any further hawkish moves, and the market maintains that a hold at the end-of-July FOMC is the base case. However, there remains caution that if Iran-driven oil price increases disrupt the inflation path, the Fed’s stance could once again become a critical variable.