U.S. equity markets: Technology leads a resilient rally
U.S. stock markets posted a positive session to open the week, with gains led by the technology sector even as geopolitical uncertainty lingered in the background.
Major indices close in the green
All three principal U.S. benchmarks finished Monday’s session with gains. The Nasdaq Composite climbed 0.4%, the S&P 500 added 0.3%, and the Dow Jones Industrial Average edged marginally higher. Energy was the only other sector to record advances, while defensive and consumer-oriented segments broadly underperformed.
NVIDIA’s AI chip announcement sparks enthusiasm
The standout catalyst for the session was NVIDIA’s unveiling of a new artificial intelligence semiconductor designed specifically for personal laptops. NVIDIA shares jumped more than 6% on the back of the announcement, drawing widespread attention from technology investors. Microsoft also moved higher, buoyed by expectations of rising demand tied to artificial intelligence adoption.
Software sector rallies on Jensen Huang’s AI comments
Software equities rose sharply on Monday after NVIDIA CEO Jensen Huang said AI agents will boost rather than disrupt the industry. ServiceNow and IBM led gains, with Salesforce, Adobe, Microsoft and others also higher. The rally followed his Computex remarks suggesting AI will increase demand for software tools, easing concerns about sector displacement.
Salesforce surges on major AI and cloud commitment
Salesforce was among the session’s strongest performers, climbing nearly 10% after announcing a significant investment programme to expand its artificial intelligence and cloud capabilities in France. The announcement reinforced broader confidence in enterprise technology spending.
Geopolitical tensions and oil market dynamics
Ongoing developments in the Middle East remained a central focus for investors, influencing both energy prices and broader risk sentiment throughout the week.
Middle East uncertainty keeps oil elevated
Oil prices stayed elevated, with Brent crude closing above $95 per barrel and WTI crude settling near $92 per barrel on Monday. By Tuesday’s Asian session, both benchmarks saw modest pullbacks, with Brent easing to approximately $94.58 and WTI to around $91.83. Nevertheless, both retained the bulk of Monday’s gains as the continued closure of the Strait of Hormuz kept supply concerns very much in focus.
US-Iran negotiations: Progress and setbacks
President Trump indicated he believes a peace agreement with Iran could be reached within a week, stating that talks were progressing and that engagement with both Israel and Hezbollah was underway. However, conflicting statements from regional officials tempered market optimism, and reports that negotiations had stalled overnight caused U.S. equity futures to weaken. S&P 500, Nasdaq 100 and Dow futures all traded lower as a result.
Global equity markets react to shifting risk appetite
The broader global picture reflected a more cautious tone as the week progressed, with regional markets responding to a mix of macroeconomic signals and geopolitical developments.
Asian markets pull back amid profit-taking
Asian equities traded lower on Tuesday, with South Korean shares leading the decline following a period of strong recent performance. Japan’s Nikkei also fell sharply. Technology shares were subject to profit-taking, and broader risk appetite was constrained by the continued uncertainty surrounding U.S.-Iran diplomatic efforts.
European stocks decline on energy and yield concerns
European equities closed lower, with the STOXX 600 falling 0.9% and the Euro STOXX 50 declining 0.5%. Rising energy costs and higher Eurozone bond yields put pressure on banking and industrial sectors. An exception was SAP, which gained sharply, carried higher by the wave of optimism generated by NVIDIA’s artificial intelligence chip announcement in the United States.
Currency markets and the US dollar
The U.S. dollar held firm above the 99 level on Tuesday, supported by safe-haven demand tied to stalled negotiations and persistent inflation concerns. The EUR/USD pair traded around 1.1640, leaving the euro modestly weaker against the dollar. Currency markets were also attentive to upcoming U.S. labour data for clues on the Federal Reserve’s next policy move.
Key corporate developments and analyst views
A range of significant company-level announcements and analyst assessments shaped market narratives during the period.
Alphabet targets major AI infrastructure investment
Alphabet announced plans to raise $80 billion to accelerate investment in artificial intelligence infrastructure, citing demand that is outpacing its current computing capacity. The raise includes a $10 billion contribution from Berkshire Hathaway. In after-hours trading, Alphabet shares slipped 0.7% following the announcement.
Hewlett Packard Enterprise posts record quarter
Hewlett Packard Enterprise delivered record second-quarter results, with revenue rising 40% to $10.68 billion and earnings exceeding analyst forecasts. The strong performance was driven by AI-related server and networking demand. The company raised both its 2026 and longer-term growth targets, sending shares sharply higher in extended trading.
Anthropic moves towards public markets
Anthropic, the developer behind the Claude AI model and backed by both Amazon and Google, has confidentially filed for a U.S. initial public offering. The company was recently valued at approximately $965 billion. Should the listing proceed, it could rank among the most significant market debuts of the current AI era and would provide investors with direct exposure to a leading frontier artificial intelligence company.
Other notable corporate moves
Several additional companies attracted attention from investors and analysts:
- Prosus is reportedly considering increasing its stake in Delivery Hero and has been in talks with other investors about potential share sales and acceptable valuations, amid reported takeover interest from Uber Technologies.
- easyJet shares rose after U.S. investor Castlelake said it is exploring a possible takeover, valuing the airline at approximately £3.06 billion.
- Tesla reported improved May registration figures across several European markets, including France, Norway, Spain and Portugal, extending a recent sales recovery, though its overall European market share has declined this year.
- Robinhood Markets faces potential Supreme Court scrutiny after a class-action lawsuit alleging it misled investors in its 2021 IPO about reliance on meme-stock and crypto trading was revived.
Broker and research house views
Market concentration and the AI premium
Evercore ISI highlighted that the S&P 500 has become highly concentrated, with a small number of AI-linked large-cap equities driving the majority of index gains. The top ten constituents now represent a record share of the benchmark, led by NVIDIA, Microsoft and Alphabet. Despite concentration and geopolitical risks, the firm maintained its S&P 500 target of 7,750, underpinned by AI-driven earnings strength.
Federal Reserve rate outlook
Yardeni Research expects the Federal Reserve to signal a tightening bias at its June meeting and to raise interest rates by 25 basis points in July, pointing to persistent inflation and robust economic growth as justification. The firm argued that rate cuts are no longer appropriate and warned that inaction could damage the Fed’s credibility and push bond yields higher.
Regional equity outlooks
Goldman Sachs raised its Stoxx Europe 600 targets but retained an Underweight stance on European equities overall, citing weaker relative macroeconomic conditions compared to global peers. Stronger M&A activity, particularly among smaller companies, was flagged as a potential positive catalyst.
Morgan Stanley expressed a constructive view on Indian equities, stating that the market has bottomed and is positioned for strong gains, supported by an earnings recovery, improving valuations and favourable policy conditions. The bank favoured financials, consumer discretionary and industrials, and sees IT services as a potential outperformer.
Individual stock calls
Microsoft rose after Citizens JMP initiated coverage with a “Market Outperform” rating and a $550 target, citing strong enterprise AI positioning and a discounted valuation versus peers. The broker sees accelerating growth, expanding margins and major total addressable market expansion driven by Azure and AI tools, though risks include competition, capital expenditure and OpenAI exposure.
NVIDIA has been added to D.A. Davidson’s Best-of-Breed list, with a Buy rating and a $300 target, citing its dominant AI infrastructure position, strong CUDA ecosystem and high switching costs. The broker highlighted massive AI-driven demand, robust margins and exceptional free cash flow, reinforcing its view of NVIDIA as a long-term quality leader.
Barclays holds an Overweight rating on IBM, seeing it as a software-led enterprise with improving margins and mid-single-digit growth driven by hybrid cloud and AI adoption. It values the equity on an EV-to-unlevered free cash flow basis, applying a 21x CY2027 multiple. The bank also highlights long-term optionality from quantum computing, relative to large-cap technology peers.
Dell Technologies was upgraded by Morgan Stanley to Equal-weight from Underweight, with its price target raised to $448. The bank reversed its bearish view, citing stronger-than-expected semiconductor supply chain access and improved pricing power. However, it stopped short of Overweight due to uncertainty over the durability of enterprise demand.
Economic data and the week ahead
A number of important data releases and events are due to shape market direction in the near term.
U.S. economic indicators remain supportive
Monday’s session was supported by firmer-than-expected U.S. economic readings. The Institute for Supply Management’s manufacturing index rose to its highest level since May 2022, indicating continued expansion in the industrial sector, while construction spending also came in ahead of forecasts. The 10-year U.S. Treasury yield ended broadly unchanged at 4.45% after an initial move higher.
Key events
Tuesday’s agenda includes the European Union’s flash inflation estimate, forecast at 3.3%, U.S. JOLTS job openings and quits data, and the TIPP economic optimism index. Federal Reserve officials Kashkari and Hammack are scheduled to speak. On the corporate side, earnings are due from Palo Alto Networks, Dollar General, Ulta Beauty and Fast Retailing, alongside U.S. oil inventory figures.
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