Wall Street Morning Briefing: US-Iran Ceasefire Agreement Collapses, Oil Rises to $80, Nasdaq Gains While Dow Drops

Every Monday to Friday morning, focusing on macroeconomics, US stocks, AI, precious metals, and oil, using data to review the market and trends to seize opportunities, produced by PANews.

Ceasefire Collapse Causes Oil Surge, Dow Drops While Nasdaq Rises

Last night and this morning, the situation in the Middle East escalated suddenly, with Trump unilaterally announcing at the NATO summit that the US-Iran memorandum of understanding has "ended", and the US military carried out strikes on Iranian targets for two consecutive nights, causing shipping in the Strait of Hormuz to nearly come to a halt. Iran responded strongly, threatening to retaliate at a "two-to-one" ratio and warning that it would close the Strait of Hormuz if attacked again.

Due to the deteriorating geopolitical situation, Brent crude oil briefly surged above $80 before closing up over 5% at $78.02 per barrel, while WTI rose 4.4% to $73.52 per barrel, pushing energy costs and inflation expectations higher, leading to a risk-averse sentiment sweeping the market. Although US EIA crude oil inventories unexpectedly increased, causing oil prices to retract some gains, the market generally believes that as long as the transportation risks in the Strait of Hormuz remain unresolved, the energy risk premium will remain high.

Analysts point out that this conflict stems from long-standing disagreements over the management of the Strait of Hormuz, and with the ceasefire agreement collapsing, the prospects for restoring navigation in this key energy corridor look increasingly bleak, posing a new severe shock to global energy supply. AT Global Markets' chief analyst believes that while the market has been trading on AI in recent weeks, geopolitical factors may once again become the dominant force in global capital markets in the coming trading days.

The Dow Jones Industrial Average fell 1.09%, the S&P 500 closed down 0.28%, but the Nasdaq Composite rose 0.20% against the trend, driven by leading AI stocks. The market's risk-averse sentiment has clearly intensified, with the VIX fear index rising 4.65%, and funds continue to concentrate on AI core assets with stronger profit certainty.

Gold Retreats, Institutions Still Optimistic About Long-Term Value

Affected by rising US dollar and US Treasury yields, gold and silver have fallen for four consecutive days. ING stated that the current trend of gold still mainly follows changes in US interest rate expectations, and the continuous purchases of gold by the People's Bank of China remain an important long-term support for gold.

Bank of America has lowered its forecast for the average gold price in 2026 to $4,360 per ounce, citing a more hawkish stance from the Federal Reserve compared to before; however, Bank of America still believes that once the rate hike cycle ends, gold is expected to challenge $5,000 per ounce. JPMorgan also believes that gold will be suppressed by interest rates in the short term, but the long-term bull market logic before 2027 remains unchanged.

Federal Reserve Meeting Minutes: AI Investment, Energy Prices, and Tariffs Intensify Inflation Concerns

The minutes from the Federal Reserve's June FOMC meeting have become another focus. The minutes show that all members unanimously decided to keep the federal funds rate target range unchanged at 3.50%-3.75%, but there are significant differences regarding future policy paths.

Of the 18 members, 9 expect at least one rate hike before the end of the year, while the number of those holding the same view in March remains zero; the number of those expecting a rate cut has dropped from 12 to just 1. The minutes point out that the AI investment boom, Middle Eastern energy risks, and tariff factors are becoming new sources of inflation, with more officials worried that price increases have spread from localized areas to broader fields.

This is the first meeting minutes since Kevin Warsh took office as chairman. Although Warsh did not disclose personal interest rate forecasts, his continued emphasis on restoring price stability has been widely interpreted by the market as a clear hawkish policy tone.

The Wall Street Journal's "Fed Whisperer" Nick Timiraos pointed out that even if the situation in the Strait of Hormuz stabilizes, the Federal Reserve will still have to face triple inflation pressures from AI investment, energy prices, and tariffs, and discussions about whether to raise rates further at the July meeting are expected to become more intense.

Ed Yardeni believes that if oil prices continue to rise, inflation may accelerate again, significantly increasing the probability that the Federal Reserve will be forced to raise rates again; LPL Financial stated that the current monetary policy path largely depends on developments in the Middle East, and the Federal Reserve will not easily release clear policy signals before seeing more inflation data.

AI Infrastructure Attracts Massive Investment, Semiconductor ETFs See Record Inflows

Despite overall pressure on the index, there has been a clear divergence in the flow of funds within the market. Macroeconomic sensitive sectors have faced fund withdrawals, while AI, semiconductors, and large tech leaders have once again become the main destinations for risk-averse funds. More and more institutions believe that the AI sector is gradually switching from high-valuation trading to profit realization, with funding allocation logic increasingly leaning towards fundamentals.

Bloomberg ETF analyst Eric Balchunas stated that the semiconductor ETF attracted about $5.4 billion in a single day on July 7, setting a record high, four times the previous record, reflecting that institutional investors are making significant moves to lay out AI core assets amid the pullback. Bloomberg strategist Michael Ball believes that the energy shock will lead the market to focus more on AI infrastructure companies with independent profitability rather than traditional cyclical industries.

Specific Project Actions and Stock Price Fluctuations:

• Nvidia surged 3.65%, becoming the biggest contributor to the Nasdaq's rise against the trend. The company announced that its open-source Nemotron 3 Ultra model has inference costs that are only one-tenth of those of closed models, further strengthening its AI ecosystem advantage. Currently, Nvidia's expected price-to-earnings ratio for the next 12 months has dropped to about 18 times, the lowest level since 2019, and many institutions believe the valuation attractiveness is increasing.

• Meta fell 2.02%, but announced plans to invest about $10 billion in Canada to build a 1GW super-large AI data center, continuing to ramp up its global AI infrastructure layout.

• Apple rose 0.88%, and Broadcom jumped 4.83%. Apple announced that it would purchase over $30 billion in US-made chips from Broadcom over the next five years and further expand their long-term partnership.

• SpaceX fell for the third consecutive day, hitting a new low since its IPO; however, its subsidiary SpaceXAI, in collaboration with Cursor, released a new generation of Grok 4.5 large model aimed at handling complex legal and financial tasks, and Ark Invest also increased its holdings by about $27 million.

• Fuel cell leader Bloom Energy plummeted 5.67%, as short-seller Hunterbrook released a lengthy report seriously questioning its core material supply chain capabilities and the revenue health of its joint ventures.

• The semiconductor sector rose, with the Philadelphia Semiconductor Index up 2.23%, CRDO rising nearly 5%, ON Semiconductor up nearly 3%, Qualcomm up 1.96%, and Amkor and TSMC both rising over 1%. Despite the recent adjustments in the tech sector, Morningstar believes this round is more about normal profit-taking after the significant gains in the second quarter rather than the end of the AI boom cycle. Evercore pointed out that long-term orders for AI servers remain robust, and demand for DRAM and HBM is still in a state of shortage.

• The storage sector also rebounded: SanDisk surged 6.77%, strongly ending a four-day decline; Seagate rose nearly 4%, while Western Digital, RMBS, and Micron all rose. Although the storage sector has recently corrected over 20% from its recent highs, institutions believe that long-term AI server demand will continue to support industry prosperity. Citigroup has included Micron in its 90-day focus recommendation list, and Bank of America continues to maintain a buy rating.

• Software cloud services faced collective pressure: Palantir fell sharply by 4% during the day, ultimately closing down 1.6%; Salesforce dropped 2%, despite securing a $13.5 billion fleet management platform order from the US Air Force, it still could not withstand the overall profit-taking tide in the sector. Additionally, ServiceNow fell 3.6%, Workday fell 4%, SAP fell 3.4%, and Oracle fell 2%.

• Chinese concept stocks surged against the wind: the Nasdaq Golden Dragon China Index rose 2.05%, significantly outperforming the three major US stock indices. Alibaba surged 11.05%, with UBS optimistic about its accelerated AI commercialization and significant improvement in Taobao flash sale profit margins; Kingsoft Cloud rose 11.44%; Baidu rose nearly 5%; JD.com rose over 4%; Pinduoduo rose nearly 3%; Tencent and New Oriental also closed higher.

• Cryptocurrency concept stocks fell: Bitcoin dropped about 2.2%, retreating to around $62,000. Strategy fell 3.58%, Coinbase fell 2.91% during the day, Circle fell 1.66%, while Robinhood rose 0.56% against the trend.

Next Points of Attention:

• July 9-10: SK Hynix US IPO Pricing and Debut. South Korean storage giant SK Hynix's US IPO has received over seven times oversubscription from global tech funds and sovereign wealth funds. The company plans to finalize the issue price on July 9 and list on Nasdaq on July 10, raising up to $24.5 billion. This super IPO will not only directly reshape the global storage chip market but its post-listing valuation performance will also serve as an absolute barometer for whether AI hardware demand has peaked.

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