HMM's VLCC (Very Large Crude Carrier) 'Universal Winner,' having exited the Strait of Hormuz following the Middle East conflict, approaches an offshore crude oil unloading facility off the coast of Ulsan. While international oil prices rose again due to clashes between the U.S. and Iran, expectations for negotiations helped limit the gains, keeping prices in the $70-per-barrel range. [Photo=Yonhap News] Last week, Money Radar posed four questions: Would international oil prices stabilize around $70 per barrel? Would the U.S. 10-year Treasury yield rise above 4.5%? Would the semiconductor correction be limited to profit-taking? And would the divergence between the Nasdaq and the Dow continue?

The market's answer this week was "uneasy stability and more rigorous selectivity."

West Texas Intermediate (WTI) closed at $71.41 per barrel on the 10th, and Brent crude finished at $76.01. Despite a mid-week surge caused by the conflict between the U.S. and Iran, gains were tempered by hopes for negotiations and the possibility of normalized shipping through the Strait of Hormuz. Nevertheless, WTI rose by about 4% for the week, and Brent crude by 5.5%. While oil prices did not skyrocket, the trend was too volatile to conclude that they had fully stabilized around the $70 mark.

The U.S. 10-year Treasury yield hit 4.56% on the 10th, crossing last week's benchmark of 4.5%. Rising oil prices driven by Middle Eastern tensions, the potential for re-accelerating inflation, and concerns over additional interest rate hikes by the Federal Reserve pushed long-term yields higher.

Yet, the New York stock market did not collapse. The S&P 500 index rose 1.2% for the week, and the Nasdaq index gained 1.7%. Conversely, the Dow Jones Industrial Average fell 0.5%, and the small-cap-focused Russell 2000 index dropped 0.6%. While the divergence between the Nasdaq and the Dow continued from the previous week, this time it was driven by large-cap AI and semiconductor stocks boosting the Nasdaq, while traditional industries and small-cap stocks lagged behind.

The semiconductor correction also did not solidify into a collapse of the AI investment cycle. Although the PHLX Semiconductor Sector Index plunged more than 4% on the 7th, it recovered those losses to finish the week up about 2%—marking its first weekly gain in three weeks. In contrast, the KOSPI fell 7.6% over the week, hit by sharp declines in Samsung Electronics and SK Hynix.

It is not that AI demand has disappeared, but rather that higher prices and expectations faced a harsher correction in the Korean market.

The name for this week's trend is "AI above interest rates."

Oil prices and interest rates were not favorable for risk assets. However, the U.S. market placed a higher premium on the profit growth potential of AI companies than on the high discount rates. The market as a whole did not embrace risk; rather, it specifically picked and bought large tech stocks deemed capable of increasing profits despite the burden of high financing costs.

The question for this week is:

"Can AI profit expectations continue to overcome the rise in oil prices and long-term interest rates?"

The current answer is a conditional yes. As long as AI investment and corporate profit forecasts are maintained, the Nasdaq can hold its ground. However, if consumer prices come in higher than expected, or if the Federal Reserve specifically mentions the possibility of further rate hikes, long-term yields exceeding 4.5% could again pressure the valuations of growth stocks.

The conclusion in one sentence is as follows:

"The market rose this week not because risks disappeared, but because it determined that expectations for AI profit growth could offset the burden of interest rates and oil prices."

There is also an element that should not be exaggerated: the fact that the Nasdaq rose does not mean that overall market risk appetite has recovered. The declines in the Dow and the Russell 2000 demonstrate that this rally was concentrated in a small number of large tech stocks.

There are four checkpoints for next week:

First, we must determine to what extent the U.S. Consumer Price Index (CPI) for June, to be released on the 14th, and the Producer Price Index (PPI) on the 15th, reflect the rise in energy prices.

Second, we must watch whether the possibility of additional rate hikes is solidified during the congressional testimony by Fed Governor Kevin Warsh before the House on the 14th and the Senate on the 15th.

Third, we must observe whether the Nasdaq can hold its own even after the U.S. 10-year yield exceeds 4.6%.

Fourth, we must verify whether negotiations between the U.S. and Iran and the normalization of operations in the Strait of Hormuz actually lower the risk premiums on oil prices and maritime freight rates.

※ Major data sources: U.S. Department of the Treasury, U.S. Bureau of Labor Statistics, Federal Reserve, New York Mercantile Exchange, Nasdaq/Philadelphia Stock Exchange, Korea Exchange. Market prices are based on the closing prices as of July 10, 2026.

※ This material is for reference only, summarizing market trends, and does not constitute a recommendation to buy or sell any specific financial product.