US Equities Rise as Chipmakers Rebound Amid Middle East Escalation
Markets digest earnings optimism and Morgan Stanley downgrades as the US and Iran exchange strikes for a tenth consecutive day.
US stock indexes posted modest gains on 21 July 2026, driven by a resurgence in semiconductor and artificial intelligence infrastructure stocks. The S&P 500 Index rose 0.38 per cent, the Dow Jones Industrial Average increased 0.17 per cent, and the Nasdaq 100 climbed 1.26 per cent. The rally in chipmakers helped offset weakness in the software sector, where Morgan Stanley downgraded several prominent names, including Adobe, Intuit, and Workday.
The rebound in technology hardware stocks followed a recent selloff that had cheapened valuations, enticing dip buyers ahead of earnings results from megacap technology companies. Forecasts compiled by Bloomberg Intelligence suggest second-quarter earnings may increase by 23 per cent, close to the first quarter’s 30 per cent surge. Analysts expect artificial intelligence spending to account for most of this growth, with AI infrastructure stocks set to contribute nearly 60 per cent of the S&P 500’s earnings-per-share growth.
Geopolitical tensions in the Middle East continued to weigh on market sentiment, with crude oil prices edging higher as the US and Iran exchanged strikes for a tenth consecutive day. The US targeted military sites in Iran, while Iranian forces attacked US military positions in Kuwait and Jordan. Houthi rebels also threatened a maritime blockade on Saudi Arabia, adding to concerns over global energy supplies and contributing to a slight rise in WTI crude oil prices.
Overseas markets mirrored the positive momentum in the United States. Japan’s Nikkei-225 Stock Average closed sharply higher by 3.26 per cent, while China’s Shanghai Composite rose 1.79 per cent and the Euro Stoxx 50 gained 0.41 per cent. The strength in equities reduced safe-haven demand for US Treasury notes, with the 10-year T-note yield rising 2.4 basis points to 4.616 per cent.
In corporate news, several companies reported results that moved their shares significantly. Hasbro led S&P 500 gainers after reporting second-quarter net revenue of $1.14 billion and raising its full-year adjusted EBITDA forecast. 3M Co also posted strong results, with adjusted EPS of $2.40 beating consensus estimates. Conversely, Danaher led S&P 500 losers after forecasting weaker third-quarter revenue growth, and MSCI Inc fell after reporting adjusted EPS below expectations.
