The Closing Bell
Stocks closed higher on a session where AI infrastructure spending papered over a grim consumer sentiment print and a Fed official's hawkish inflation warnings, while Iran headlines whipsawed crude and airlines in both directions.
The Fed and the consumer both flashed warning signs, and the market shrugged.
Cleveland Fed's Hammack ran through a string of hawkish comments: underlying inflation is likely above target, the public has dealt with above-target inflation for an extended period, capex will pressure prices "for a while," and the Fed needs to stay restrictive. That landed alongside a University of Michigan sentiment reading of just 48.1, with inflation expectations at 4.6% near-term and 3.4% over five years. Durable goods orders were mixed, soft on the ex-defense read but firmer ex-transportation. None of it stopped the tape: the S&P 500 (SPY) closed up 0.5% at $771.31, with the Nasdaq (QQQ) also up 0.5%.
AI infrastructure demand drove the day's biggest cross-currents.
Akamai's seven-year, $11.6 billion cloud deal with Anthropic, paired with optimism around Meta's Muse AI agent, lit up chip and data-center names from Lam Research to Vertiv, and pushed Microsoft (MSFT) up 3.7% on continued AI capex enthusiasm. But the same Akamai deal hammered cybersecurity, with CrowdStrike (CRWD) down 2.9% and peers like Palo Alto, Okta, and Zscaler sliding on fears of lost business, even as the Justice Department closed its CrowdStrike deals investigation. Meta Platforms (META) fell 3.4% despite the Muse tailwind, weighed down by a beefed-up safety warning on the product and a jury verdict finding Meta misled New Mexico consumers in the Cambridge Analytica trial.
Oil and airlines swung on dueling Iran headlines.
Crude fell more than 2% (USO down 3.1%) after Iran's foreign minister said Tehran submitted a seven-day plan to reopen the Strait of Hormuz, lifting airlines including Delta (DAL), up 2.6%, and pressuring chemical, fertilizer, and oil-and-gas names on fears of restored Gulf supply. A senior Iranian official later pushed back, telling Reuters the Strait stays closed and no nuclear talks happen until Iran's conditions are met, keeping the trade unsettled into the close.
**Elsewhere, Costco (COST) rose 2.9% even after disclosing a $152 million charge tied to memory-chip inflation in its electronics business. NewGenIvf (NIVF) and SCHMID Group both got halted on upside circuit breakers, the latter on chatter about glass-substrate supply talks with Nvidia, Intel, and AMD. Charter Communications slid in sympathy with a Comcast downgrade, Twilio dropped after an HSBC downgrade to Reduce, and Bitcoin slipped below $84,000 on rate-hike fears.
After the bell and tomorrow:
Watch the Strait of Hormuz standoff over the weekend, continued Fed speak, and the SK Hynix Solidigm IPO chatter (targeting a 2027 listing near $150 billion) for early-week headlines.
Bottom line: the AI capex trade is still strong enough to override a weak consumer and a hawkish Fed, but the Hormuz standoff is the wildcard that could reprice both oil and the rate path fast.