US equities advanced, led by a strong recovery in chip stocks, despite higher US Treasury yields and renewed speculation about a July Federal Reserve rate hike, according to Deutsche Bank’s Jim Reid [1]. The Philadelphia Semiconductor Index surged by 5.21%, marking its best daily performance in the past month, which significantly contributed to lifting the S&P 500 by 0.89% on the day, even though a majority of companies in the index lost ground [1].
The market simultaneously priced in a more hawkish path for central banks, with real yields reaching multi-year highs and bond yields moving higher globally [1]. While sovereign bonds experienced a negative session, global equities, particularly those in the technology sector, saw notable gains. In Europe, the STOXX 600 rose by 0.56%, with the STOXX Technology Index climbing 3.29% on the day, also driven by the rebound in chip stocks [1].
Looking ahead, investors are awaiting earnings reports from Alphabet and Tesla after the US market close, with particular interest in Alphabet’s capital expenditure plans and the market’s reaction to them [1].
CONCLUSION
A sharp rebound in chip stocks powered gains in US and European equities, offsetting the negative impact of rising bond yields and a more hawkish Fed outlook. The market remains focused on upcoming earnings from major tech companies, which could further influence sentiment.