US equity markets opened higher on Tuesday evening, Beijing time. Chip stocks extended their rebound for a second consecutive day following last Friday's sharp sell-off, while crude oil prices declined amid market anticipation of a nearing US-Iran agreement.
The Dow Jones Industrial Average rose 28.41 points, or 0.06%, to 50,814.42. The S&P 500 index gained 32.93 points, or 0.44%, reaching 7,438.66. The Nasdaq Composite advanced 190.97 points, or 0.74%, to 26,120.65.
Micron Technology shares were up nearly 5% in early trading, continuing a 10% rebound from Monday. The stock had fallen roughly 20% over the two sessions ending last week, including a 13% plunge on Friday.
Qualcomm shares rose nearly 3% in early trading, marking a second day of gains following an 11% drop on Friday.
The iShares Semiconductor ETF climbed 2%, building on a 6% recovery on Monday. The ETF had plummeted 10% on Friday, its worst single-day performance in six years, as investors grew concerned about the rapid and excessive surge in AI-driven chip stocks.
West Texas Intermediate crude futures fell more than 2%, trading below $90 per barrel. This followed comments from the US President suggesting an agreement with Iran could be reached "within two or three days," which would "immediately" open the Strait of Hormuz.
Despite a series of attacks between Israel and Iran this week, the US President sought to reassure markets that a US-Iran deal was days away. He told reporters on Monday evening that a deal to end the war with Iran could be finalized "within two or three days," after which the Strait of Hormuz would open "immediately." He has repeatedly stated that an agreement with Tehran to reopen the strait was close, though such a deal has yet to materialize.
Iran's foreign ministry stated on Monday that it had suspended military strikes against Israel but warned that attacks would resume if Israeli forces continued operations in Lebanon. Hours later, Israel's Prime Minister stated that the conflict with Iran and Hezbollah was "not over."
In Asian markets, Japan's Nikkei 225 index rose over 2%, closing at 65,416.63. South Korea's KOSPI rebounded sharply from Monday's plunge, surging 8.18% to close at 8,096.93. Hong Kong's Hang Seng Index edged up 0.15%, while mainland China's CSI 300 index gained 1.87% to 4,801.81. Australia's benchmark S&P/ASX 200 index fell 0.24% to close at 8,604.2.
During Monday's regular session, chip stocks led gains for the S&P 500, which rose 0.3%. The tech-heavy Nasdaq Composite climbed 0.86%. Both indices recouped some of the losses from last week's tech sell-off. The blue-chip Dow Jones Industrial Average bucked the trend, falling 80.77 points, or 0.16%.
While artificial intelligence and the chip sector have been primary market drivers on Monday and in recent sessions, Brian Kersmanc, a portfolio manager at GQG Partners, expressed skepticism about the trend's longevity.
Kersmanc stated, "The long-term question is sustainability. So, how long can this momentum last over the long term?"
The portfolio manager added, "Ultimately, many of these chip stocks are commodities. If you look at it from a commodity perspective, when prices rise rapidly—in some areas of memory chips, prices have risen 15-fold over the past year or so—if I rephrase the analogy... if energy prices rose 15-fold, from $60 a barrel to $900, how much energy stock would people buy now?"
OpenAI's confidential IPO filing late Monday further fueled enthusiasm in the AI sector. SpaceX, active in aerospace and AI, is set to go public on Friday in what would be the largest IPO in history. Some believe this listing could add fuel to the AI-driven bull market, but some investors worry that the company's $1.75 trillion valuation might also signal a peak for the trend.
On the economic data front Tuesday, the US trade deficit has shrunk by roughly half in the year since the US President announced his 'Liberation Day' tariff policy.
The US Commerce Department reported Tuesday that the total goods and services trade deficit for April was $55.9 billion. This brings the year-to-date deficit down by $213.5 billion compared to the same period last year, a decrease of 49%. The deficit for the month was $70 billion lower than in March and also below the $56.1 billion forecast in a Dow Jones survey.
Comments