Chips rebound and the Dow sets another record, with bubble warnings alongside

Good morning. After the July 4 holiday, U.S. stocks took off again. Chip stocks such as Intel and Micron bounced after last week’s plunge, the Dow rose to 52,905 for another record, and the Nasdaq added more than 150 points.

Warnings grew just as loud. The Bank for International Settlements said in its annual report that if the AI bubble bursts, a credit event could erupt in private credit, since more AI spending is being financed with debt. A Morgan Stanley strategist expects chip stocks to see a correction. On the other side, bulls argue July will be an even stronger month.

Oil is calmer. Saudi Aramco unusually began discounting its flagship crude for Asian buyers, and WTI opened below $70 a barrel. OPEC+ is raising output for a fifth month while Hormuz shipping reopens, so supply is starting to overflow. That is welcome news for anyone worried about inflation.

On the corporate side, Strategy, the company known for holding huge amounts of bitcoin, sold 3,588 coins below its purchase price to raise cash for payments to shareholders, locking in a large loss. Microsoft is cutting 3,200 jobs in its Xbox unit.