Trump Softened on Iran. Chips Led the Rally. Bitcoin Rebounded. NATO Closed Ranks.

The Nasdaq climbed 1.3%. The S&P 500 gained 0.8%. The Dow added 0.3%. Futures were little changed overnight after the rally, with Dow futures down 36 points while S&P 500 and Nasdaq 100 futures were nearly flat.

The biggest driver was oil.

Crude prices fell after President Trump said Iran had reached out seeking a deal. Qatar and Pakistan are also working to restart negotiations between Washington and Tehran, easing fears that the Strait of Hormuz would face a prolonged disruption.

Chips added fuel to the rally.

Investors rotated back into semiconductor stocks ahead of earnings season. SK Hynix priced its U.S. ADR at $149 ahead of Friday's Nasdaq debut, one of the largest foreign listings in U.S. history.

The geopolitical tone also shifted.

The NATO summit as an extraordinary 48 hours. Leaders arrived expecting confrontation but left describing a more unified alliance after closed-door meetings with President Trump. NATO Secretary General Mark Rutte kept negotiations on track, while Turkey strengthened ties with Washington and Ukraine gained renewed support.

The Signal

Markets moved away from war and back toward earnings. That shift holds only if diplomacy continues.

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Brent fell after Wednesday's surge as traders focused on renewed diplomatic efforts rather than military escalation. Trump's comments about possible talks helped remove part of the war premium that returned earlier this week.

The conflict has not ended.

Iran launched missiles and drones toward U.S. military targets in Kuwait, Bahrain and Qatar after U.S. strikes hit roughly 90 Iranian military sites. Iranian officials also reported explosions near the Bushehr nuclear facility.

Hormuz remains the center of the dispute.

Iran continues insisting shipping should operate under Iranian arrangements while Washington continues protecting commercial traffic through the waterway.

The market is betting the conflict stays contained.

Energy Signal

Oil fell because traders expect negotiations to return before shipping suffers lasting damage.

The Fed chair announced five independent task forces that will review communications, inflation, employment, productivity, balance sheet policy and data practices.

The members include venture capitalist Marc Andreessen, former Bank of England Governor Mervyn King, economist Greg Mankiw, former Walmart CEO Doug McMillon, former Reserve Bank of India Governor Raghuram Rajan and former Fed Governor Jeremy Stein.

The review goes beyond personnel.

Warsh wants the groups to challenge long-standing Fed practices, including forward guidance, inflation measurement and the economic effects of artificial intelligence.

Markets barely reacted.

Attention remains focused on inflation, oil and September rate expectations, but the review signals broader policy changes may begin later this year.

Macro Signal

The next Fed decision is about rates. The bigger story is how Warsh may change the institution itself.

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Meta (META) launched Muse Spark 1.1, its newest AI coding model aimed directly at OpenAI and Anthropic.

The strategy is changing.

Meta is moving beyond free AI tools toward paid developer services. The company will charge for API access while continuing work on larger models and an open source version.

The pressure is clear.

Meta plans to spend up to $145 billion on AI this year and still trails leading AI developers. Investors increasingly want proof that AI spending can become recurring revenue.

PepsiCo (PEP) added a consumer warning. Revenue rose 6.4% to $24.18 billion, but organic growth was only 2.4% and North America stayed weak. Food revenue fell 2%, beverage volume dropped 4%, and management blamed weaker consumers, high gas prices and convenience-store softness. The stock fell as much as 4%.

Elsewhere, SK Hynix prepares for Friday's Nasdaq debut after pricing its ADRs at $149.

The AI trade continues broadening from chips into software, infrastructure and developer platforms.

Capital Signal

AI companies are still trying to monetize spending. Consumer staples are showing pressure. The split between AI investment and household demand is getting wider.

Bitcoin traded near $63,263 after bouncing from geopolitical selling earlier in the week. Ethereum also recovered to roughly $1,748.

The recovery happened despite ETF pressure.

Spot Bitcoin ETFs lost another $84 million, ending a three-day inflow streak. Even so, buyers stepped in as fears around Iran faded.

Bitwise believes the bigger picture is improving.

The firm called this the healthiest bear market Bitcoin has experienced. The current drawdown is about 50%, compared with 78% in 2022 and 84% in 2018.

Institutional behavior has changed.

Existing investors are averaging into weakness while larger allocators wait for regulatory clarity. Bitwise argues Bitcoin's floor continues rising as ownership shifts toward professional investors.

The main headwind remains macro.

Higher rates, sticky inflation and AI enthusiasm continue pulling capital away from crypto, even as long-term adoption improves.

The Verdict

ETF flows remain weak. Long-term ownership continues getting stronger. Bitcoin is becoming harder to push lower.

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Thursday reminded investors what markets prefer.

Negotiation over escalation.

Stocks rallied as oil fell. Chips recovered. Bitcoin bounced despite ETF outflows. NATO closed its summit with more unity than expected, and Trump left the door open to renewed diplomacy.

The deeper themes did not change.

Warsh is redesigning the Fed. Meta is turning AI into a paid business. Institutional investors continue treating Bitcoin weakness as an accumulation opportunity.

The market spent the past week trading headlines.

The next move depends on whether diplomacy keeps replacing conflict and whether earnings justify the optimism that returned today.