New York stocks rebounded broadly, led by semiconductor-related shares, after U.S. President Donald Trump withdrew his plan to impose a toll on ships passing through the Strait of Hormuz just one day after announcing it, while inflation data also came in weaker than expected.
On the 14th, the Dow Jones Industrial Average closed at 52,508.27, up 9.63 points, or 0.02%, from the previous session. The Standard & Poor's 500 index rose 28.25 points, or 0.38%, to 7,543.59, while the Nasdaq Composite jumped 233.83 points, or 0.90%, to 26,107.01.
Among the largest technology stocks by market capitalization, Nvidia rose 4.06%, along with gains for Amazon (0.07%), Google parent Alphabet (1.99%), Facebook parent Meta (0.66%) and Tesla (0.36%). By contrast, Apple (-0.77%), Microsoft (-1.55%) and SpaceX (-2.20%) fell despite the broader rally. In particular, semiconductor-related stocks that had fallen sharply the previous day showed strength, including Micron (4.92%), Broadcom (1.32%), AMD (2.57%), ASML (2.87%) and SanDisk (5.01%). The Philadelphia Semiconductor Index also jumped 2.54%.
The day's gains in New York stocks were driven by Trump's reversal, just one day later, of his decision to collect a toll equivalent to 20% of the value of private ship cargo passing through the Strait of Hormuz. On the same day, Trump said on his social networking service Truth Social, "Based on very productive discussions with Middle Eastern leaders, the United States has decided to replace its 20% compensation fee with trade and investment agreements that various Middle Eastern countries will conclude with the United States." The previous day, Trump had unilaterally declared on Truth Social that he would collect 20% of the value of cargo loaded on ships as a toll in return for the U.S. military guaranteeing safe passage for private vessels transiting the Strait of Hormuz.
New York stocks were also relieved by a lower-than-expected June Consumer Price Index (CPI) reading. According to the U.S. Department of Labor, the June all-items CPI fell 0.4% on a seasonally adjusted basis from May. The decline was larger than the market forecast of a 0.1% drop. It also marked the largest decline since the 0.8% drop in April 2020. Core CPI, which excludes food and energy, was flat (0.0%) from May. This too fell short of the market forecast of a 0.2% increase. The pace of gains also eased compared with the 0.2% increase in May.
According to the Chicago Mercantile Exchange (CME) FedWatch Tool, the federal funds futures market priced in an 83.4% probability that the Federal Reserve would hold rates at its Federal Open Market Committee (FOMC) meeting on the 28th and 29th. That was up sharply from 58.3% the previous day. The probability of a 0.25 percentage point rate hike plunged to 16.6% from 41.7% the previous day.
SK hynix's American Depositary Receipt (ADR) surged 27.29%, buoyed by the resumption of the rally in semiconductor stocks. In particular, news that Barclays had set a target price of $330 for the SK hynix ADR — more than double the $149 offering price — while forecasting a memory chip shortage over several years, added to the share gains.
IBM shares plunged 25.21% as second-quarter earnings came in below expectations. IBM explained that the weak results stemmed from a decline in demand for the mainframe computers and software it makes, as major companies concentrated their investments on data centers. JPMorgan and Goldman Sachs, which reported better-than-expected second-quarter earnings before the open, soared 2.50% and 9.00%, respectively.
International oil prices rose on lingering uncertainty despite Trump's reversal of the toll. On the ICE Futures exchange in London, Brent crude for September delivery rose 1.7% from the previous session to $84.73 per barrel. On the New York Mercantile Exchange, U.S. West Texas Intermediate (WTI) crude for August delivery rose 1.5% to $79.34 per barrel. The United Arab Emirates (UAE) Defense Ministry said two oil tankers passing through the Strait of Hormuz via Omani waters had been attacked by Iran, which pushed oil prices higher once more.
