- US stocks face pressure from geopolitical uncertainty and higher oil prices
- Apple expands Broadcom partnership with $30 billion multi-year deal
- Alphabet joins Dow Jones and SpaceX enters Nasdaq
Renewed tensions, rising oil prices and Fed rate hike odds weigh on US stocks
US stocks have experienced the effect of renewed geopolitical tensions in Iran, higher oil prices and volatile investor interest in technology stocks. The most significant factor has been the renewed tensions involving the United States and Iran. Concerns over re-escalating US-Iran strikes have driven oil prices notably higher, raising anxiety over energy-driven sticky inflation and higher expectations for Fed rate hikes.
US President Donald Trump said that the ceasefire agreement with Iran is over, blasting the Iranian leadership after fresh exchanges of strikes. Meanwhile, markets are fully pricing in a rate hike of 25bps by October for the Fed. Furthermore, they are factoring in an 85% probability for a second rate hike of 25bps by April 2027. Rate hike expectations were lower before the renewed US-Iran tensions and after the previous week’s jobs report showed notably weaker than expected increase in US nonfarm payrolls.
This week, the S&P 500 and Nasdaq indices have been almost unchanged, while the Dow Jones and small-cap Russell 2000 indices have declined by 1.1% and 1.3% respectively. The Philadelphia semiconductor index has experienced enough volatility this week, as it rose by more than 2.0% on Monday and Wednesday, while it dropped by 5% on Tuesday. More specifically, Nvidia and Broadcom have risen by 5% and 8% respectively.
In 2026 so far, the S&P 500, Nasdaq and Dow Jones indices have risen by 9.3%, 11.3% and 8.8% respectively, with the Philadelphia semiconductor index having jumped by 78%. The small-cap Russell 2000 index has outperformed the three major US stock indices with a 19.1% rise. Today, US stock futures are edging higher mainly due to chip and tech stocks following a news report that China will soon allow domestic purchases of Nvidia’s H200 AI chip.
Apple strengthens US domestic chip manufacturing with $30 billion Broadcom partnership
Apple decided to expand its partnership with Broadcom in a multi-year deal expected to reach $30 billion. The agreement, announced by Apple on Wednesday, involves the production of more than 15 billion US-made chips and includes a $2 billion expansion of Broadcom’s facility in Colorado. It represents the biggest piece of Apple’s $600 billion four-year US investment plan, announced in 2025, and marks the largest commitment under its American Manufacturing Program. Broadcom disclosed on Monday that it had entered into a new long-term agreement with Apple to develop and supply products for Apple through 2031. This week, Broadcom has jumped by 8%, while Apple has risen by 1.5%.
Tech giants gain larger index presence
On June 29, Alphabet replaced Verizon in the Dow Jones index. The company joined tech giant peers Nvidia, Amazon, Apple and Microsoft in the blue-chip index, reflecting higher exposure to AI and the cloud business. The index that used to be heavy on old economy stocks now allocates more than 20% of its weight to the growth-friendlier sectors. This week, Alphabet has risen by 0.5% SpaceX became the fastest addition to the Nasdaq 100 index, potentially unleashing significant buying from passive investors less than a month after the company’s public debut.
Nasdaq added SpaceX after the market closed on July 6 and before trading began on July 7. Since SpaceX’s publicly tradable float remains small compared with its market capitalization, even a small index weighting could attract significant purchases from passive investors. However, S&P declined to adopt a similar fast-track process for the S&P 500 index. This week, SpaceX has retreated by 8.5%.