WS #8999

The dominant market narrative is a classic rotation out of semiconductors into value sectors, driven by Broadcom's earnings miss and a series of Fed comments suggesting AI-driven productivity gains are not yet inflationary. Broadcom's 15% drop is dragging the Nasdaq while the Dow hits a record, with money rotating into healthcare (UnitedHealth upgraded by BofA and Morgan Stanley) and financials. Meanwhile, geopolitical signals are mixed: Putin signals readiness for a Ukraine deal, and Trump reportedly hesitates to resume all-out war with Iran unless US troops are killed, which is weighing on oil prices. However, Iran's oil exports have fallen to a six-year low, providing a floor. The Quantinuum IPO opened strong at $68 vs $60 IPO price, signaling continued appetite for quantum computing plays. Bitcoin continues to slide after MicroStrategy's sale, with the crypto market down 48% from its peak. The Fed's Daly and Schmid both noted that AI could be disinflationary but that tariffs and oil are currently driving inflation, suggesting the Fed remains on hold. The Trump administration's $700M coal subsidy via the Defense Production Act is a notable policy move that supports coal stocks but is unlikely to move broader indices.