Whispers of Cuts, Roars of Chips

Market Report for Thursday, June 26, 2025

Whispers of Cuts, Roars of Chips

Markets rallied Thursday, brushing off Washington’s procedural theater and the fading fiction that anyone still tracks the Byrd Bath, in favor of what really matters: AI, chips, and the transformation that’s no longer coming—it’s here.

Level Change 6/26/25 (%)
– – – – – – – – – – – – – – –
+0.9 Dow
+1.0 Nasdaq
+0.9 Nasdaq 100
+0.8 S&P 500
+1.3 S&P 400
+1.6 S&P 600

Washington kept up appearances with high drama over the reconciliation bill, still marinating in Senate procedure. Medicaid cuts, SALT caps, and the legislative equivalent of ghost pepper seasoning had everyone sweating. Don’t fall for it: passage is all but baked in. They’ll get their overspending done.

In a parallel theater, the administration hinted at an imminent trade twist, in which the EU relaxes both tariffs and non-tariff barriers. Treasury, in turn, scrapped its oddly personal “revenge tax” in exchange for G7 allies shelving their own retaliatory levies. The press secretary, in full Zen mode, waved off the July 9 deadline as more suggestion than schedule.

But the real signal came from the Fed, or rather, from the White House’s interpretation of it. President Trump is still considering naming a replacement for Chair Jerome Powell months before his term ends next May. The Fed chair, having stubbornly clung to his independence and economic models, now faces political replacement therapy.

Fedsters played it cool in monetary Esperanto.

Goolsbee said early naming wouldn’t rattle the committee. Daly and Collins advised patience. Barkin warned that trade policy resolution could drag on. Barr said the Fed is positioned to wait. The question is: wait for what? It used to be data. Now it looks more like they’re waiting for the Oval hammer to fall on Powell’s head. Adjustable-rate mortgage morons want him gone, data be damned.

But none of that really matters. Not the timing of cuts, not who chaired what. The only story with shelf life is AI.

Which brings us to Micron (MU -1.3%), which beat and raised on strong demand for DRAM and HBM chips. DRAM is the workhorse memory that brings multitasking to life. HBM—high-bandwidth memory—is the newer, faster, fancier cousin, built for AI models that like their data served hot and in bulk.

Micron’s earnings call was basically a mixtape for the AI crowd: accelerating demand, limited supply, pricing power. The market responded by bidding up the entire chip complex, with Nvidia touching another record, again. No one remembers recession calls when AI chips are printing cash and guidance is going vertical.

And that was the day: Powell threatened, Powell ignored, tariffs teased to ease, and AI marching oblivious to it all. The macro crowd might notice when it’s Fed Chair GPT.

— Jason Kelly