The S&P 500 Index ($SPX) (SPY) on Thursday closed up +0.81%, the Dow Jones Industrial Average ($DOWI) (DIA) closed up +0.27%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed up +1.62%. September E-mini S&P futures (ESU26) rose +0.82%, and September E-mini Nasdaq futures (NQU26) rose +1.63%.
Stock indexes settled higher on Thursday, led by a rally in chipmakers, after South Korea’s SK Hynix saw its American depositary receipts (ADRs) listing more than seven times oversubscribed, signaling strong investor demand. The US offering by SK Hynix would raise about $24.5 billion for the company, making it the second-largest by a foreign company, according to Bloomberg calculations. Strength in trucking and freight stocks also boosted the broader market after Citigroup upgraded the sector. In addition, the decline in crude oil prices lifted airline stocks and cruise line operators.
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Stocks rallied on Thursday despite an escalation of hostilities in the Middle East as the US and Iran traded attacks against each other for a second day.
Signs of strength in the US labor market are also supportive of stocks after weekly initial unemployment claims unexpectedly fell -2,000 to a 6-week low of 215,000, showing a stronger labor market than expectations of a +2,000 increase to 217,000. Conversely, Thursday’s housing news was negative for stocks after Jun existing home sales unexpectedly fell -2.4% m/m to 4.09 million, weaker than expectations of an increase to 4.20 million.
The outlook for strong Q2 earnings is a bullish factor for stocks. Forecasts compiled by Bloomberg Intelligence suggest Q2 earnings may increase by +23%, close to Q1’s blowout earnings of +30%, which was more than double the +12% analysts had expected. AI spending is expected to account for most of earnings, with AI infrastructure stocks set to contribute nearly 60% of the S&P 500's earnings-per-share growth in Q2.
WTI crude oil (CLQ26) gave up an early advance today and fell more than -1% on speculation that the tit-for-tat attacks between the US and Iran will not escalate any further. Crude prices initially moved higher after the US military struck Iran for a second day on Thursday, hitting about 90 Iranian targets to degrade the country's ability to attack commercial shipping in the Strait of Hormuz. Iran responded by targeting US bases in Bahrain, Kuwait, and Qatar with drones and missiles. On Wednesday, President Trump said the ceasefire with Iran is over, raising the prospect of persistent hostilities in the region that could disrupt energy supplies. The US on Tuesday also revoked the Iran oil waiver that allowed buyers to purchase and transport Iranian oil legally.
The markets are discounting a 24% chance of a +25 bp rate hike at the next FOMC meeting on July 28-29.
Overseas stock markets settled higher on Thursday. The Euro Stoxx 50 closed up +1.28%. China's Shanghai Composite recovered from a 1-month low and closed up +1.65%. Japan's Nikkei-225 Stock Average closed up +1.38%.
Interest Rates
September 10-year T-notes (ZNU6) on Thursday closed up +8.5 ticks, and the 10-year T-note yield fell -4.0 bp to 4.539%. T-notes moved higher on Thursday amid a decline in crude oil prices, which lowered inflation expectations and is dovish for Fed policy. T-notes added to their gains after US Jun existing home sales unexpectedly declined. T-notes pushed to their high Thursday afternoon amid strong demand for the Treasury’s $22 billion auction of 30-year T-bons, which had a bid-to-cover ratio of 2.44, above the 10-auction average of 2.40.
Gains in T-notes were limited after weekly US jobless claims unexpectedly fell to a 6-week low, a sign of labor market strength that is hawkish for Fed policy. Also, Thursday’s stock rally reduced safe-haven demand for T-notes.
European government bond yields moved lower on Thursday. The 10-year German bund yield fell from a 1.5-month high of 3.118% and finished down -0.8 bp to 3.084%. The 10-year UK gilt yield fell -7.7 bp to 4.897%.
German trade news was mixed, with May exports unexpectedly rising +0.9% m/m, versus expectations of a -0.4% m/m decline. May imports fell -2.5% m/m, weaker than expectations of -0.8% m/m.
Swaps are discounting a 14% chance of a +25 bp ECB rate hike at its next policy meeting on July 23.
US Stock Movers
Chipmakers and AI infrastructure stocks rallied on Thursday, providing support to the overall market. The iShares Semiconductor ETF (SOXX) closed up more than +3%. ARM Holdings Plc (ARM) closed up more than +9%, and SanDisk (SNDK) closed up more than +8%. Also, Advanced Micro Devices (AMD) and Lam Research (LRCX) closed up more than +5%, and Western Digital (WDC), Micron Technology (MU), Marvell Technology (MRVL), and ON Semiconductor (ON) closed up more than +4%. In addition, KLA Corp (KLAC), Applied Materials (AMAT), Seagate Technology Holdings NV (STX), and Microchip Technology closed up more than +3%, and Analog Devices (ADI), NXP Semiconductors NV (NXPI), Texas Instruments (TXN), and Qualcomm (QCOM) closed up more than +2%.
Trucking companies moved higher on Thursday after Citigroup upgraded the sector. FedEx Freight Holding (FDXF) closed up more than +7%, and Old Dominion Freight Line (ODFL) and ArcBest (ARCB) closed up more than +3%. Also, Knight-Swift Transportation Holdings (KNX) and JB Hunt Transport Services (JBHT) closed up more than +2%, and CH Robinson Worldwide (CHRW), Marten Transport Ltd (MRTN), Saia Inc (SAIA), and XPO Inc (XPO) closed up more than +1%.
Airline stocks and cruise line operators settled higher on Thursday after WTI crude oil prices fell more than -1%. Norwegian Cruise Line Holdings (NCLH) closed up by more than +6%, and Alaska Air Group (ALK) closed up more than +5%. Also, Carnival (CCL) closed up more than +4%, and American Airlines Group (AAL), United Airlines Holdings (UAL), Delta Air Lines (DAL), and Royal Caribbean Cruises Ltd (RCL) closed up by more than +2%. In addition, Southwest Airlines (LUV) closed up more than +1%.
Energy producers and service providers fell on Thursday as crude oil prices declined nearly -2%. APA Corp (APA) closed down more than -5% to lead losers in the S&P 500. Also, Devon Energy (DVN), ExxonMobil Holdings (XOM), ConocoPhillips (COP), Halliburton (HAL), Diamondback Energy (FANG), and Occidental Petroleum (OXY) closed down more than +2%. In addition, Chevron (CVX) closed down more than -1%.
Cerebras Systems (CBRS) closed up more than +9% after announcing it plans to expand its European AI infrastructure to 200MW of total compute capacity by the end of 2027. Goldman Sachs downgraded the stock to sell from neutral with a price target of $19.
Ceco Environmental Corp (CECO) closed up more than +5% after JPMorgan Chase initiated coverage on the stock with a recommendation of overweight and a price target of $130.
Comfort Systems USA (FIX) closed up more than +5% after Goldman Sachs reinstated coverage of the stock with a buy recommendation and a price target of $2,159.
Granite Construction (GVA) closed down more than -12% after Goldman Sachs downgraded the stock to sell from neutral with a price target of $139.
Paramount Skydance (PSKY) closed down more than -4% after Arete Research downgraded the stock to sell from neutral with a price target of $2.
Costco Wholesale (COST) closed down more than -4% to lead losers in the Nasdaq 100 after reporting that June total comparable sales rose 8.8%, below the consensus of 9.8%.
PepsiCo (PEP) closed down more than -3% after reporting Q2 operating profit of $4.02 billion, weaker than the consensus of $4.06 billion.
International Business Machines (IBM) closed down more than -2% after Starbucks said it was developing in-house tools with the help of artificial intelligence that could replace some software applications it buys from IBM.
Earnings Reports(7/10/2026)
Delta Air Lines Inc (DAL), Frequency Electronics Inc (FEIM), Hingham Institution For Savings (HIFS).
On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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