WS #5951

Markets are pricing in a de-escalation in the Iran conflict, with S&P 500 and Nasdaq hitting record highs, but oil prices remain elevated near $100/bbl, with Brent up 16.5% and WTI up 14.3% for the week, indicating a disconnect. The rally is driven by tech and semiconductors, with the Philadelphia Semiconductor Index up 47% over 18 consecutive sessions, Intel surging 24% on strong data center demand, and Nvidia and TSMC ADRs hitting new highs. However, geopolitical risks persist: Trump called off the Witkoff/Kushner trip to Pakistan for Iran talks, and intelligence suggests China is preparing to supply air defense systems to Iran, including MANPADS, via third countries. Additionally, a megayacht linked to sanctioned Russian oligarch Alexey Mordashov passed through the Strait of Hormuz, highlighting ongoing sanctions evasion. Google plans to invest up to $40 billion in AI startup Anthropic, with $10 billion upfront, signaling intense AI competition. The Fed is expected to keep rates steady this week while watching energy costs for inflation. Key earnings from Microsoft, Alphabet, Amazon, Meta, and Apple are due this week, which will test the rally's sustainability.