WS #11210
Wall Street closed lower on Wednesday (July 1) as hawkish Fed comments and a tech selloff weighed on markets, though Meta Platforms surged 8.8% on news it is building a cloud business to sell excess AI computing capacity. The semiconductor index plunged 6.3%, with AMAT -10%, INTC -9%, AMD -6.9% as the displacement trade hit chips. Oil prices fell to four-month lows (Brent $71.57, WTI $68.58) as US-Iran talks in Qatar showed progress, with flows through the Strait of Hormuz recovering. Fed Chair Warsh reiterated commitment to 2% inflation target, pushing rate hike expectations for September. Meanwhile, multiple sources report Microsoft is planning a third major layoff round (up to 5,500 jobs) next week, targeting sales, consulting, and Xbox divisions. The dominant narrative is a tech rotation out of semiconductors into AI/cloud plays, with oil de-escalation continuing. The narrative is STABLE but with a notable MAG7 carve-out: META's cloud launch contradicts the broader tech weakness.
Topics
Key developments
- Meta Platforms surges 8.8% on plans to build cloud business selling AI computing capacity
- Fed Chair Warsh signals inflation still too high, markets price in September rate hike
- Oil prices fall to four-month lows as US-Iran talks progress, Strait of Hormuz flows recover
- Microsoft planning third major layoff round (up to 5,500 jobs) next week
- Semiconductor index plunges 6.3% as AI displacement trade hits chipmakers