Stocks shrug off the war headlines as chips lift the indexes

Good morning. The ceasefire has effectively collapsed, yet U.S. stocks rose last night. President Trump said he was not restarting full-scale war, and the Dow gained 0.27% to close at 52,487. A rally in chip stocks drowned out the Middle East worry. Oil fell 4%, as traders bet neither the U.S. nor Iran is ready for a new war.

Underneath, though, a new story is building at the Fed. The minutes of the June meeting show officials starting to see the AI infrastructure boom as a fresh source of price pressure. Power and equipment demand from AI lifts prices, and if so, rates may need to stay high for longer. Prediction markets now put the odds of a Fed rate hike this year, not a cut, at 54%.

Bubble warnings came from every direction. A well-known investor said the AI sector ticks every classic box of a bubble, and Taiwan’s central bank chief said the AI boom is real, but so is the bubble risk. One analysis noted that chipmakers make up a fifth of the U.S. market’s value, echoing 1999. On the other side, some argue the recent pullback is a chance to buy tech again.

Jobs data was fine. Weekly jobless claims fell to 215,000, though continuing claims rose, so some signs of a slowdown remain.