Markets ended the week lower dragged down by renewed selling in many of the AI oriented names that have led the market for much of the past two years. That was exemplified by the Philadelphia Semiconductor index comprised of such names as Nvidia, Broadcom, and Micron, which fell 10% for the week, leaving it in bear territory, down 20.2% from its most recent high in late June. In shades of last year’s “DeepSeek” selloff, semi conductors were particularly impacted by an announcement from Chinese AI firm Moonshot that its AI model Kimi K3 could be on par with the best offerings from US firms OpenAI and Anthropic.
Interest rates rose during the week, with the 10-Year yield reaching 4.64% at one point, its highest level since February 2025, pressured by higher energy prices and comments by Fed Chair Kevin Warsh during Congressional testimony that the Fed has “no tolerance” for high inflation.
Fighting between the US and Iran intensified over the course of the week pushing oil up 15.5% to close the week at $82, its highest level since mid-June, just prior to the two countries announcing an agreement to work towards a lasting peace. While the prevailing belief is that both sides ultimately want a lasting peace, the current fighting is widely seen as an attempt by the two adversaries to gain leverage over the other- with the US degrading Iran’s economy and Iran attempting to keep the Strait of Hormuz closed and global energy prices elevated to increase political pressure on the US- before a final peace deal is finalized.
