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Markets Post Strong Gains Amid Geopolitical Turbulence
The stock market closed with a decisively positive week, as all major indices gained more than 3%. The rally was driven primarily by fast-moving geopolitical developments in the Middle East and continued momentum in the technology hardware sector, even as software stocks extended their painful decline.
The Iran-US Ceasefire and Its Ripple Effects
The single largest catalyst for the week's gains was the positive momentum in diplomatic talks between the United States and Iran. On Tuesday, a ceasefire agreement was reached that included the reopening of the Strait of Hormuz — a critical chokepoint for global oil shipments. Markets rallied sharply on the news.
However, the optimism was short-lived. Iran announced that Israel had violated the ceasefire with strikes in Lebanon, prompting the closure of the strait once again. Israel indicated it would pursue negotiations with Lebanon in the near term, leaving the situation fluid but somewhat stabilized by week's end.
The net effect on crude oil was dramatic: prices plunged more than 14% over the course of the week. This steep decline hammered energy-linked stocks but provided a tailwind for travel companies, which benefit directly from lower fuel costs.
Hardware Soars, Software Stumbles
The week's market volatility created a clear divergence between hardware and software names. Semiconductor and hardware companies had an exceptionally strong showing. Intel, SanDisk, and Lam Research were among the top performers in the S&P 500, with both SanDisk and Lam Research reaching new all-time highs.
On the opposite end of the spectrum, the so-called "SaaS apocalypse" continued to deepen. ServiceNow fell to a three-year low, and alongside Akamai Technologies and Intuit, it ranked among the S&P 500's biggest laggards for the week. The ongoing rotation out of software-as-a-service names reflects growing investor skepticism about valuations and growth trajectories in the sector, particularly as capital flows increasingly toward AI-related infrastructure plays.
Coreweave and the AI Infrastructure Boom
One of the week's standout stories was Coreweave, the AI cloud infrastructure company, which surged 24% after announcing major partnerships. The company expanded its contract with Meta Platforms through December 2032 in a deal worth $21 billion, underscoring the enormous capital commitments being made to support AI workloads at scale. On Friday, Coreweave also revealed a separate multi-year agreement with Anthropic, further cementing its position as a key infrastructure provider for leading AI companies.
The enthusiasm wasn't limited to Coreweave alone. Nebulous, a peer in the AI infrastructure space, rallied 33% on the week, signaling broad investor appetite for companies building the physical backbone of the AI revolution.
Looking Ahead: Earnings Season Begins
With the week's geopolitical and sector-driven action in the rearview mirror, attention now turns to earnings season. Financial companies are set to report first, alongside Netflix, which will offer an early read on consumer spending and streaming trends. These reports will be closely watched for signals about corporate health heading into a period still marked by geopolitical uncertainty and shifting sector leadership.