Market Optimism Rides Chip Comeback and Tame Inflation
Markets opened Tuesday with a dose of optimism, as S&P 500 futures climbed 0.3% and tech giants led the advance. The spark: Nvidia shares gained over 4% after announcing imminent resumption of AI chip sales to China, with AMD also reportedly poised to restart shipments to Chinese customers. Investors found further comfort in the latest inflation release, which saw June’s Consumer Price Index rise a mere 0.3% from the prior month—a 2.7% annual pace landing exactly on consensus estimates. Core inflation ticked up at its slowest rate in months, suggesting the Federal Reserve is keeping price pressures on a short leash.
Chip Sales to China Resume, Reshaping Trade Dynamics
In a sharp turn, the Trump administration eased some of its signature technology export restrictions, granting Nvidia the go-ahead to ship H20 AI chips to China and reportedly doing the same for AMD’s MI308 line. After persistent lobbying, this reversal marks a striking concession in a landscape of ongoing tariff threats and mounting geopolitical tension. The about-face has been interpreted on Wall Street as a signal that economic realities—or tariff negotiations—may now be guiding policy as much as security concerns. Nvidia CEO Jensen Huang emerged as a central player in these negotiations, underscoring the outsize influence a few companies now wield over both markets and policy.
Corporate Earnings, AI Investment, and a Low Bar for Growth
Earnings season has begun with the bar set on the low side: FactSet forecasts just 4.3% year-over-year profit growth for S&P 500 constituents—the weakest pace since late 2023. Yet early reports contained rays of hope. JPMorgan Chase surprised to the upside on investment banking and trading, while Wells Fargo delivered strong results despite a guidance cut.
Meanwhile, tech’s AI investment spree continues. Google parent Alphabet announced a $25 billion commitment to new data and AI infrastructure in the U.S., underscoring just how deeply future growth—and energy demand—are tied to the arms race for artificial intelligence dominance. Amazon-backed Anthropic unveiled updated AI financial research tools, while The Trade Desk leapt 14% on news it will join the S&P 500 index.
Global Markets Buoyed Despite Persistent Trade Jitters
The mood was upbeat not just in the U.S., but also across Asia-Pacific and Europe. Hong Kong’s Hang Seng Index rose 1.6%, while Japan’s Nikkei climbed 0.55%. In Europe, major indices opened higher amid cautious hope that trade negotiators would keep markets on stable footing, even as President Trump’s tariff threats against the EU and Mexico loom large in the background. For now, tech’s rebound and contained inflation have helped offset the risks, sustaining equity strength at all-time highs.
