Wall Street steadied on Thursday as investors leaned back into the artificial-intelligence trade ahead of SK Hynix's Nasdaq debut, even as a fresh flare-up between Washington and Tehran drove crude sharply higher and rattled cyclical corners of the market. The split tape leaves the S&P 500 clinging to gains for the week and the Dow nursing a triple-digit setback from Wednesday's session.
AI Names Steady the Tape
The tech-heavy Nasdaq Composite closed Wednesday at 25,870.65, up 0.2%, as megacap AI winners absorbed the geopolitical shock better than the broader market. The Dow Jones Industrial Average shed 1.1%, or 576.76 points, to finish at 52,348.39, while the S&P 500 slipped 0.3% to 7,482.71. Early Thursday trade extended the divergence, with S&P 500 and Nasdaq futures edging higher as investors "focused on AI prospects ahead of SK Hynix's US trading debut, setting aside jitters over a flare-up in US-Iran hostilities," according to Yahoo Finance.
The rotation back into semiconductors comes after a rough stretch for memory names. SK Hynix is set to price its US offering Thursday with shares slated to begin trading Friday, and demand is running at roughly seven times the available float, according to Fortune. Analysts are treating the listing as a real-time referendum on whether the AI capital-spending cycle still has legs, or whether the recent chip drawdown marks a bigger top.
Oil Surges as US Strikes Iran
The offsetting drag came from crude. The United States launched new airstrikes against Iran early Thursday, and Tehran retaliated by targeting Gulf countries, reigniting the Hormuz risk premium that markets had briefly begun to fade. West Texas Intermediate futures jumped 4.4% to settle at $73.52 per barrel, while Brent crude climbed 5.4% to $78.19. Integrated producers led the tape: ConocoPhillips rose 2.1% and Marathon Petroleum gained 5.4%.
The move in energy is meaningful for the inflation debate. Energy already accounted for more than 60% of the monthly headline CPI increase in May, when the index rose 0.5%, according to the Bureau of Labor Statistics. Headline CPI is running at 4.2% year over year heading into next Tuesday's June print, and a sustained bid in crude threatens to keep the top-line number sticky just as Fed Chair Kevin Warsh presses his price-stability message.
Fed Backdrop Turns More Hawkish
Warsh has left little doubt about the FOMC's posture. Speaking at the ECB Forum on July 1, he told the audience, "We're all in the price stability business… prices are too high," and reiterated that he wants "interest rate policy to be the working core for monetary policy." Nine of the 18 policymakers on the rate-setting committee have signaled support for higher rates this year, with six projecting two more quarter-point increases — a marked shift from March, when no official penciled in a hike and the median dot showed one cut for 2026.
That hawkish backdrop is why the AI trade matters so much for index-level performance. With the Dow and S&P vulnerable to any energy-led inflation surprise, and small caps struggling on rate-hike odds, the largest technology and semiconductor names are once again doing the heavy lifting to keep the broader benchmarks afloat.
What to Watch
Traders now turn to SK Hynix's Friday open, the June CPI release on July 14 at 8:30 a.m. ET, and any further escalation in the Gulf. A hot inflation print combined with a sustained bid in crude would put a July rate-hike squarely back on the table — and test whether even the AI trade can carry the tape from here.
Sources: Yahoo Finance, CNBC, Bloomberg, TheStreet, Fortune, U.S. Bureau of Labor Statistics, Federal Reserve