Morning in New York: The AI rally will face a real test

A daily review and forecast of events in the U.S. stock market by Mikhail Denislamov, Deputy Director of Freedom Capital Markets Research.

The technology sector will be the focus of today’s trading, given the ongoing pressure on semiconductor manufacturers and companies involved in artificial intelligence. Trading sessions on Asia-Pacific exchanges opened lower, and even Samsung Electronics’ record-breaking preliminary second-quarter operating profit estimate failed to dispel concerns about the overvaluation of companies in the AI supply chain. Samsung shares fell nearly 7%, and against this backdrop, South Korea’s Kospi index dropped by about 5%. The sell-off also affected other chipmakers and technology companies in the region. This trend could dampen investor interest in U.S. chipmakers following the previous day’s rebound.

The key foreign policy event of the day will be the NATO summit opening today in Turkey, which U.S. President Donald Trump will attend. Participants at the summit will discuss increasing defense spending among alliance members, the ongoing conflict in Ukraine, and the situation regarding Iran.

Tensions in the oil market have flared up again following reports of an Iranian attack on a tanker near the Strait of Hormuz, which is supporting the geopolitical premium in oil prices.

The key macroeconomic release this Tuesday will be the May trade balance data (consensus: a deficit of $78.4 billion, following $55.9 billion in April). These figures could lead to a revision of expectations regarding second-quarter GDP growth.

After the close of regular trading, Penguin Solutions (PENG), Enerpac Tool Group (EPAC), and Kura Sushi USA (KRUS) will report their earnings.

S&P 500 futures are trading near zero. We assess the risk balance for the upcoming session as negative, with elevated volatility. Downward pressure from the Asian tech sector and ongoing geopolitical risks outweigh the neutral macroeconomic backdrop.

— Crinetics Pharmaceuticals (CRNX) shares are soaring by about 100% on news that Vertex Pharmaceuticals (VRTX) plans to acquire the company for approximately $10 billion ($85 per share). The deal is scheduled to close this quarter.

— Rivian Automotive (RIVN) shares are down about 9% following the announcement of a offering of 75 million Class A shares, with an option to issue an additional 11.25 million shares. The company forecasts second-quarter revenue in the range of $1.55–1.65 billion, which is above the consensus estimate.

— Aligos Therapeutics (ALGS) shares are up more than 4% following the receipt of a $25 million upfront payment under an exclusive licensing agreement with Amoytop for the drug pevifoscorvir sodium in Greater China. This product has been granted Breakthrough Therapy designation in China, and the potential total future payments under the agreement are estimated at $420 million.

— Turn Therapeutics (TTRX) is rising by about 4% on expectations of the release of interim results from the Phase II trial of GX-03 for the treatment of atopic dermatitis. The company will also present an updated design for the second phase of the trial, which will determine the program’s future direction.

— RxSight (RXST) shares are down about 3% following the announcement of a strategic partnership with Alcon (ALC) to develop adjustable intraocular lenses for the correction of presbyopia. The company will receive a $60 million upfront payment and could earn up to an additional $140 million as the project progresses through development and regulatory approval stages. In addition, it is entitled to royalties on future sales.

Trading on July 6 on U.S. stock markets ended in positive territory. The S&P 500 rose 0.72%, the Nasdaq 100 gained 1.26%, the Dow Jones added 0.29%, and the Russell 2000 rose 0.45%. Market breadth was positive; however, within the S&P 500, the number of declining stocks exceeded the number of advancing ones, and the equally weighted benchmark lagged behind the market-cap-weighted index by approximately 70 basis points. The main positive driver was a rebound in semiconductor stocks, including memory chip makers, following a two-day sell-off during which the SOX sector index lost more than 11%.

Against this backdrop, the IT sector emerged as the top performer (XLK: +1.65%). The healthcare sector (XLV: −1.09%) lagged behind amid a correction in biotech and pharmaceutical stocks.

The main theme of the day was increased demand for stocks with strong growth momentum. The technology sector was buoyed by continued optimism surrounding capital expenditures on AI infrastructure. The focus was on new agreements by TeraWulf (WULF: +4.86%) and IREN (IREN: +13.11%), as well as the extension of the partnership between Broadcom (AVGO: +3.73%) and Apple (AAPL: +1.31%).

Macroeconomic data had virtually no impact on trading. S&P Global’s final PMI for the services sector in June came in at 51.2 points, compared with a consensus estimate of 51.3 and a reading of 51.3 the previous month. The corresponding figure from the ISM matched market expectations, falling to 54 points from 54.5 in May.

Treasury bond yields fell by 5–6 basis points at the short end of the curve. Comments by Federal Reserve Governor Christopher Waller confirmed the central bank’s cautious approach to adjusting monetary conditions. The speaker noted the value of forward guidance but also warned of the risks of sending overly hawkish signals regarding the impact of monetary policy on the economy.

— GFL Environmental (GFL: +8%) is considering delisting from the stock exchange amid interest from buyout funds; however, the company’s debt of approximately $7.1 billion could hinder the deal.

— Donald Trump stated that the donation made by Dell Technologies (DELL: +4.4%) CEO Michael Dell to the Trump Accounts program would be reimbursed, and urged investors to buy the company’s stock.

— Solstice Advanced Materials (SOLS: −15.1%) plans to acquire Element Solutions (ESI: −3%) for $14.5 billion in a combination of stock and cash. This price represents a premium of about 15% over the company’s closing price on July 2. The transaction is expected to close in the first half of 2027.

— O’Reilly Automotive (ORLY: −6.7%) has made a cash offer to acquire the automotive division of Genuine Parts (GPC: −2.9%). The potential value of the asset could exceed $10 billion.

This article was AI-translated and verified by a human editor