WS #15410

Equities are rallying to record highs, driven by a retreat in the 10-year Treasury yield from a 24-year peak and a massive energy-sector catalyst: Google’s $5.2 billion nuclear deal with Constellation Energy. This specific development has decoupled the tech rally from the macro rate environment, providing a structural demand anchor for AI infrastructure that supports both the tech sector and the power grid. The S&P 500 and Nasdaq 100 hitting records coincides with this, suggesting the market is rewarding tangible AI capex over abstract rate fears. Concurrently, geopolitical risk is escalating sharply. The US is deploying a third aircraft carrier toward Iran, and the US Treasury has raised its Brent crude price forecast for 2027. This escalation is creating a mixed-cohort environment: energy stocks (XOM, CVX, ET) are rallying on supply fears and the nuclear deal, while shipping and defense stocks are seeing inflows. However, the broader market is currently absorbing this risk without a major selloff, likely due to the liquidity provided by the yield retreat. A notable divergence is emerging in the semiconductor supply chain. While Marvell raised its FY28 revenue target to $20B and Nvidia partners are securing massive AI cloud contracts, there is a persistent narrative that the Magnificent Seven's earnings will lag the broader S&P 493. This suggests a rotation away from mega-cap tech valuations toward mid-cap industrial and energy beneficiaries of the AI build-out.