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The Dow pulled back from record highs early on as traders once again rotated out of AI-related stocks and grappled with rising oil prices and higher bond yields.

The selling pressure was especially noticeable in the semiconductor space. Micron dropped 7%, while KLA, Marvell Technology, Broadcom, and AMD also moved lower. The VanEck Semiconductor ETF (SMH) lost more than 5%, highlighting the broad weakness across the chip sector.

Investor sentiment took another hit after reports that Iran attacked a Qatari liquefied natural gas tanker near the Strait of Hormuz. The escalation pushed energy prices higher, with Brent crude climbing more than 2% to trade above $73 a barrel.

The weakness in AI-related stocks actually started overseas. South Korea’s Kospi index tumbled nearly 5%, led by a sharp decline in Samsung Electronics. Despite reporting a strong jump in second-quarter profit, concerns about future spending and demand overshadowed the positive earnings news.

Adding to the uncertainty, reports surfaced that DeepSeek is developing its own AI chip. If successful, that move could reduce its reliance on suppliers such as Nvidia and Samsung, raising fresh concerns about future demand for some of the industry’s biggest chipmakers. Nvidia shares also finished lower on the day.

By the closing bell, markets were struggling to absorb a combination of rising oil prices, higher bond yields, and growing inflation expectations. The dollar spent much of the session drifting sideways before surging into the close.

That late-day dollar strength took much of the momentum out of an early gold rally, sending the precious metal back toward the $4,100 level.

Bitcoin experienced its own rollercoaster session, swinging between $62,500 and $64,500 before finishing little changed.

With geopolitical tensions in the Middle East heating up and traders facing a growing list of macroeconomic headwinds, the big question is whether the upcoming earnings season can provide enough fuel to keep the market’s longer-term uptrend intact.

1. Moving the market

The S&P 500 and Nasdaq kept their positive momentum going early in the week, building on the strong gains posted during the previous week as technology stocks continued to attract buyers.

Interestingly, those advances came even as semiconductor stocks—the market’s leadership group for much of the year—remained under pressure.

Traders continued to trim positions in chipmakers and rotate into other areas of the market. The VanEck Semiconductor ETF (SMH) fell 3.2%, marking its second consecutive weekly decline.

That rotation may actually be a healthy development for the broader market. Financials, Healthcare, and Industrials all closed the week at fresh all-time highs, more than compensating for the recent consolidation in semiconductor stocks.

While the weakness in semis appears to be a short-term headwind, it has done little to derail the broader market’s advance.

Traders will also be paying close attention to the Federal Reserve this week, with minutes from the June meeting—the first chaired by Kevin Warsh—scheduled for release on Wednesday. Any clues about the future path of interest rates could influence market sentiment.

By day’s end, the major indexes delivered another impressive performance. The Dow shook off an early selloff and rallied to a new record high, surpassing the 53,000 mark for the first time.

Elsewhere, crude oil was little changed as shipping traffic through the Strait of Hormuz continued to recover, although volumes remain below historical norms.

Bond yields finished mixed, and the dollar was essentially unchanged. Gold continued its climb toward the $4,200 level, while bitcoin rebounded sharply from an early dip after receiving a boost from President Trump’s renewed support for cryptocurrencies.

Historically, the market is entering one of its strongest seasonal periods of the year. The big question, however, is whether this year’s rally still has enough fuel left to follow the usual seasonal script—or will we be in for a surprise?

1. Moving the market

Stocks moved higher today, led by a strong rally in chipmakers, as Wall Street closed out a solid first half of the year and an impressive second quarter.

It’s been anything but a smooth ride. The major indexes pushed to new all-time highs, but not without plenty of turbulence along the way.

Traders had to navigate sharp swings in energy prices tied to tensions in the Middle East, along with growing questions about just how sustainable the current pace of AI spending really is.

Looking ahead, many traders believe the bull market still has room to run, provided tensions between the U.S. and Iran don’t escalate again. There’s also a growing sense that leadership could broaden beyond the market’s biggest winners, with investors rotating into more reasonably valued sectors and stocks.

June offered a mixed picture beneath the surface. Small Caps and the Dow were the month’s strongest performers, while concerns about the costs and profitability of AI investments weighed modestly on the Nasdaq and S&P 500. Even so, the pullbacks were relatively mild and did little to derail the broader uptrend.

The shift in interest-rate expectations has been one of the year’s biggest surprises. Just a few months ago, markets were pricing in several Fed rate cuts for 2026.

Today, expectations have swung dramatically, with some investors now preparing for the possibility of rate hikes as inflation concerns linger and policymakers maintain a hawkish tone.

Meanwhile, the U.S. dollar extended its rally for a fourth straight quarter, climbing back toward the upper end of its two-year trading range. A stronger dollar continued to pressure gold, which posted its fourth consecutive monthly decline. Bitcoin also struggled, recording its weakest start to a year since 2022.

Perhaps the biggest takeaway is that while fears of an energy-driven economic shock have faded as oil prices retreated from above $90 to around $70 per barrel, concerns about higher interest rates remain very much alive. In short, the energy shock may be behind us, but the rate shock is still front and center.

As we head into the second half of the year, will broader market participation keep the bull market going, or will higher rates eventually start to weigh on investor enthusiasm?

1. Moving the market

Stocks moved higher early in the session as investors reacted positively to a temporary easing of tensions between the U.S. and Iran.

However, gains were limited by notable weakness in semiconductor stocks, particularly among artificial intelligence-related names.

Chipmakers came under heavy selling pressure, led by Micron, which tumbled nearly 8% to its lowest level in about two weeks. Other memory-related names were hit as well, with Sandisk falling 8.4% and Intel losing 5.3%. The pullback in semiconductors weighed on the broader technology sector for much of the day.

Geopolitical developments remained front and center. The U.S. and Iran agreed over the weekend to pause hostilities and allow commercial ships to move freely through the Strait of Hormuz, helping calm some of the market’s immediate concerns. That sense of relief was later challenged when President Trump accused Iran of violating the ceasefire and warned of further military action, keeping traders on edge.

Despite the mixed headlines, dip buyers once again showed up in force. Their steady buying helped preserve the market’s early gains and pushed stocks to a positive close. Big Tech also staged a solid rebound after last week’s sharp selling, providing additional support for the major indexes.

The Mag 7 showed signs of life and recovered much of their recent weakness, although they have still trailed the performance of the other 493 S&P 500 components over the past three trading sessions.

Elsewhere, market action was a bit unusual. Oil prices climbed, stocks advanced, and bond prices also moved higher—a combination that doesn’t often occur together. Longer-term Treasury yields edged up modestly, while the U.S. dollar softened.

The weaker dollar provided very little support for gold, which worked its way back toward the $4,000 level. Bitcoin also experienced another wild ride but ultimately finished the day back above $60,000.

With traders continuing to shrug off both geopolitical uncertainty and sector-specific weakness, the big question is: Can the market’s resilience continue, or will escalating global tensions eventually become too difficult to ignore?