Even the longest storm subsides once peace looks plausible. US President Donald Trump's remarks that Iran is prepared to halt the fighting that flared this week were enough to sharply dampen fears of a full-scale Middle East war. Oil fell, inflation expectations cooled, and the S&P 500 closed near record highs. Small caps and financials rallied alongside the most crowded AI trades.

US equity indices dynamics

However, the real hero of the rebound was not the broad index — it was memory and chip manufacturers. Sandisk, Micron, and Western Digital led the rally, confirming that this group, rather than the Magnificent Seven, has become the preferred way to play AI. The Philadelphia Semiconductor Index has jumped by 83% since the start of the year, while Bloomberg's Magnificent Seven index is up only about 1.8%.

This looks less like a blip than a structural shift. The equal-weighted S&P 500 has outpaced the standard market-cap weighted version — +10.8% versus +9.3% year-to-date. That happens when the largest tech giants stop dragging the market higher solo and money spreads into less hyped names such as Dollar Tree and Hubbell. Even Nvidia, Alphabet, and Amazon have been stuck this year, lagging hundreds of other index constituents.

S&P 500 vs equal-weighted index dynamics

Wall Street forecasters have reason to worry. Many had assumed the Magnificent Seven — roughly one-third of the S&P 500 market cap — would carry the index to an average year?end target near 7,824. If the tech titans remain inactive, the rest of the index will have to deliver another 6.8% on top of the 13% it has already generated.

Panic over a wider regional escalation proved short-lived. Jefferies' base case is that cooler heads will prevail and the US and Iran will return to the negotiating table. The bank says it has diversified exposures toward Asia and Europe while maintaining a tactical stake in US tech.

BlackRock, for its part, argues that AI-related capex commitments will support the investment theme for another two to three years, even if some tech leaders begin generating negative free cash flow and tap the debt markets more aggressively.

The market has learned again to live with geopolitics rather than be dominated by it. The question is how long that calm will last if Tehran decides to re-assert itself.

Technically, the daily chart shows that the market clearly tested a pin-bar, enabling long positions initiated near 7,492 to be scaled up at 7,505. A successful break above the June high at 7,580 would be the next trigger to add to long positions.