US stocks post their biggest quarterly gain in six years

In short: US stocks had their strongest quarter in six years, driven largely by chip and AI-related companies, even as markets swung on war news and big tech concerns.

What's going on

US stocks ended the three months to June 30 with their best quarterly run since 2020. The S&P 500, a widely followed list of large US companies, rose 14.9%. The Nasdaq Composite, which has more technology companies, rose 21.4%.

Trading was not calm. Investors reacted to fallout from the Iran war and to large price moves in chip companies. SpaceX also drew attention after a huge stock market debut on June 11, when it raised $75bn, then briefly climbed to an almost $3tn valuation before slipping later in the month.

A key driver was the surge in semiconductor stocks. Semiconductors are the tiny chips that power computers, phones, and AI systems (like the “brains” inside many devices). Analysts at Citadel Securities said chip companies now make up almost one-fifth of the S&P 500’s total value, the highest share on record.

The Financial Times also noted strong gains in “AI infrastructure” businesses such as memory makers and power providers. These are the suppliers that help AI systems run, similar to how roads and power lines support a growing city.

What to watch

Investors are debating when heavy spending on AI equipment will pay off. Another risk is higher US interest rates, which can hurt stock prices by making borrowing more expensive. The next US jobs report, due Thursday, may influence expectations for what the Federal Reserve does next.

Source: Financial Times