Wall Street’s Best Quarter Runs Into an Inflation Test

Wall Street is coming off its strongest quarter in years, powered by a massive rally in semiconductor stocks and renewed optimism around AI, but the second half of the year begins with investors still watching inflation, interest rates, and the labor market closely.Paul Lane and Marc Fandetti break down why tech and semiconductor stocks drove the market higher in the second quarter, why international and small-cap stocks have also delivered strong gains, and how Kevin Warsh’s Federal Reserve could respond if inflation remains too high. They also discuss Microsoft’s latest round of layoffs, why tech job cuts have not yet shown up as broader labor market weakness, how AI cybersecurity concerns are forcing new questions about regulation, why Detroit automakers missed the hybrid boom, and why this year’s Fourth of July cookout is getting more expensive.