Market Context
The week of Monday 6 to Friday 10 July 2026 saw the AI trade recover its footing just one week after its sharpest revaluation of the year. The S&P 500 closed Friday at 7,575.39, up 0.42% on the session and more than 1% on the week, its fourth winning week in the last five, leaving it roughly 40 points below its all-time high of 7,620.90 set on 2 June. The Nasdaq added 0.29% to close at 26,281.61, and the Dow rose 149.60 points to 52,637.01. Three forces defined the week. The technology sector rose about 3% as the AI trade regained momentum. SK Hynix completed the largest-ever US listing by a foreign company. And the Iran ceasefire frayed once more, with fresh strikes lifting oil 5% mid-week before it settled back. The FOMC minutes, published on Wednesday, confirmed a hawkish committee and pushed the 10-year Treasury yield to its highest level since May.
Key Signals
The AI trade snapped back, led by Meta. Meta jumped about 6% on Friday and gained nearly 15% on the week, its best weekly performance since early 2024, after Bank of America maintained its buy rating and an internal memo reviewed by Reuters suggested Meta is improving its AI cost structure. The stock extended gains after launching Muse Spark 1.1, which the company claims outperforms Google's Gemini 3.1 Pro at significantly lower pricing. Nvidia rose around 4% on Friday. The technology sector gained roughly 3% on the week and is now up 29% year-to-date.
SK Hynix delivered the largest-ever US listing by a foreign company. SK Hynix priced 17.79 million American depositary receipts at $149, raising $26.51 billion, and the shares opened at $170 on Friday, rising about 14% on debut. The listing gave US investors direct access to South Korea's second most valuable company and underscored the depth of institutional appetite for memory exposure. The proceeds are earmarked for aggressive expansion, including new factories and equipment, a direct signal that the memory supply constraint is being addressed with capital rather than accepted.
The FOMC minutes confirmed a hawkish committee. The minutes from the June meeting, released Wednesday, reinforced the hawkish tone of Warsh's debut. The median dot now implies a single 25 basis point hike by the end of 2026, and policymakers removed prior language suggesting a willingness to cut if needed. The 10-year Treasury yield rose 9 basis points on the week to 4.568%, its highest since 22 May, and has now risen in eight of the last nine sessions.
The Iran ceasefire frayed, and oil rebounded. Attacks continued in the Strait of Hormuz, where shipping slowed considerably late in the week, and the ceasefire now looks tenuous. Oil posted a weekly gain of 4% on renewed supply concerns following fresh US-Iran strikes, though prices remained relatively contained amid doubts that full-scale war would return. WTI settled Friday at $71.41 and Brent at $76.01.
Analysts are voicing genuine concern about a second-half correction. Micron has surged more than 200% in 2026, while Lam Research, Marvell, and Intel have all more than doubled year-to-date. Eric Parnell of Great Valley Advisor Group captured the prevailing unease, noting that after so much euphoria around the AI boom stretching back to the summer of 2023, the market is clearly in a boom phase, but he holds genuine concerns about some form of bust arriving in the second half of the year.
Stock Market Performance & Other Assets
Equities
Year-to-date, the S&P 500 is up 10.7%, the Dow 9.5%, the Nasdaq 13.1%, and the Russell 2000 20%. On Thursday, the Nasdaq rose 1.3% or 336 points on strength in the AI giants, while the S&P gained 0.8% even as nine of eleven sectors closed lower, a stark illustration of how narrow the leadership had become on that session. WD-40 rallied more than 15% after third-quarter earnings of $2.33 per share crushed the $1.56 expected and the company raised full-year guidance. Circle Internet Group rose more than 13% on US regulatory approval. Delta slipped more than 3% despite beating on both top and bottom lines. Asian markets were firm, with the Kospi adding 2.5% on Friday and the Nikkei rising 1.2%, while mainland China's CSI 300 fell 1.96%.
Commodities
Oil rose 4% on the week on renewed Middle East supply concerns, though Friday brought a modest pullback with WTI settling at $71.41, down 0.93%, and Brent at $76.01, down 0.38%. Crude briefly topped its 200-day moving average during the week before retreating, with no firm direction established. Resistance sits near $81 should the rally resume. The energy sector gained 3.1% on the week and is up 23% year-to-date.
Fixed Income & Crypto
The 10-year Treasury yield rose 9 basis points to 4.568%, its highest since 22 May, having climbed in eight of the last nine sessions as the hawkish FOMC minutes and firmer oil reinforced the higher-for-longer view. The dollar index ended the week higher, while the yen bounced from around 40-year lows after Japan said it plans to encourage pension funds to increase holdings of domestic financial assets. The pound slipped 0.06% to $1.3397.
Market Movers & Shakers
The week reversed the prior week's rotation almost completely. Chips pulled ahead of cyclical stocks, with the Nasdaq outperforming the Dow, and the support for semiconductors reflected heavy interest in SK Hynix alongside positive commentary on chip equipment demand from Applied Materials leadership. Meta's near 15% weekly gain on AI cost improvements was the single most important stock-specific development, suggesting the market will reward hyperscalers that can demonstrate discipline on the capital expenditure that has weighed on them for months. The buy signals now favour the memory complex, which has both pricing power and fresh capital to expand, and the hyperscalers showing genuine cost control.
One Insight
Meta's near 15% weekly gain deserves close attention because it points to what may be the defining question of the second half. For most of 2026, the hyperscalers have been punished for the scale of their AI capital expenditure. Meta was downgraded in April for precisely this reason, with JPMorgan citing a challenging path to generating returns on a capex budget that had swelled toward $135 billion. This week, the stock recorded its best performance in more than two years on the strength of an internal memo suggesting the cost structure is improving, alongside the launch of a model the company claims outperforms Google's at materially lower pricing. The market did not reward Meta for spending more. It rewarded the company for spending better.
That distinction is what separates a durable AI investment cycle from a speculative one. The bear case has never been that AI lacks utility. It has been that the capital required to deliver it may exceed the revenue it generates for a long time, and that the companies bearing the cost cannot pass it on. The memory shortage story of the past fortnight, in which Apple and Microsoft raised hardware prices because they could not absorb chip costs, was the clearest expression of that pressure. Meta's week offers the counter-argument: that efficiency gains, better models, and improving unit economics can bend the cost curve. Meanwhile, SK Hynix has just raised $26.5 billion explicitly to build the capacity that would relieve the memory bottleneck at its source. Both developments point in the same direction. The AI trade is maturing from a story about demand into a story about supply, cost, and margin. Eric Parnell's concern about a second-half bust is not unreasonable given how far names like Micron have run. But the more useful frame is that the market is no longer paying for AI exposure indiscriminately. It is beginning to pay for AI economics, and that is a healthier basis for the next leg, whichever direction it takes.
What We’re Watching (next 7–14 days)
Q2 earnings season begins in earnest: JPMorgan, Bank of America, Goldman Sachs, Wells Fargo, and Citigroup all report Tuesday, 14 July, followed by ASML, Johnson & Johnson, Morgan Stanley, and BlackRock on Wednesday. The banks will give the first comprehensive read on credit quality, trading revenue, and loan demand in a post-conflict, higher-rate environment.
June CPI and Warsh's congressional testimony (July 14): The inflation print lands the same day Fed Chairman Kevin Warsh testifies before Congress. With the FOMC minutes confirming a hawkish committee and yields at 4.57%, any upside surprise on inflation would sharply raise hike expectations. Warsh's testimony is his first extended public exchange since taking the chair.
ASML and TSMC results: The two most important semiconductor supply-chain reads of the quarter. Their capital expenditure commentary and order books will confirm or challenge the AI infrastructure thesis at its foundation.
The Strait of Hormuz: Shipping has slowed considerably, and the ceasefire looks tenuous. Oil has been contained on doubts that full-scale war will return, but that assumption is now the single most important unpriced risk in the market.
Next week's major earnings:
Tuesday, 14 July, brings the major banks. Wednesday 15 July brings ASML, Johnson & Johnson, Morgan Stanley, BlackRock, Progressive, BNY Mellon, and PNC, alongside the June PPI and the Fed Beige Book. Taiwan Semiconductor also reports, making this the most consequential week for the AI supply chain since Nvidia's results in May. The combination of bank earnings, chip earnings, CPI, PPI, and Warsh's testimony makes the coming week the densest information cluster of the third quarter.
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Until next week,
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