Equity markets rally despite Strait of Hormuz closure and rising inflation risks

Stock markets have surged sharply even though the Strait of Hormuz remains closed for 10 weeks and macroeconomic indicators worsen. Chipmakers like Intel, NVDA, and AMD have led the rally, but supply chain risks and rising AI infrastructure costs pose challenges. Expectations for Federal Reserve rate cuts have disappeared amid rising inflation and commodity prices, increasing the chance of a rate hike. Investors are optimistic but face risks if these assumptions prove wrong.