Written by: Tide Research

After Iran launched a counterattack on U.S. military bases, the market assessed that the conflict between the two sides is controllable, and the speculative trends in oil prices came to an end. Brent crude oil fell 2.6% to $76, inflation expectations eased, and U.S. Treasury yields dropped across the board. Chip stocks seized this opportunity, with the Philadelphia Semiconductor Index surging 3.06%. Micron announced a $250 billion investment plan in the U.S., while SK Hynix was oversubscribed 7 times when listed on the U.S. stock market, directly driving the Nasdaq to rise 1.30%, marking two consecutive days of gains. Both gold and Bitcoin rebounded, with market sentiment shifting from geopolitical anxiety to anticipation for the earnings season.

Market Performance

The S&P 500 rose 0.81%, closing at 7543.64 points. The Dow Jones gained 0.27%, closing at 52487.41 points. The Nasdaq increased by 1.30%, closing at 26206.89 points. The Nasdaq 100 rose 1.62%, closing at 29727.097 points. The Russell 2000 climbed 1.22%, closing at 2992.541 points. The VIX fell 6.27%, closing at 15.84.

The Philadelphia Semiconductor Index rose 3.06%, closing at 12960.003 points, marking two days of strengthening. Micron rose 4.5%, announcing a large investment plan; SanDisk surged 7.6%, Arm rose over 9%, NVIDIA increased by 3.65%, and Broadcom rose 3.20%. TSMC ADR slightly fell 0.03%, while AMD increased 5.67%. The index for memory chips and hardware supply chains rose 5.11%, closing at 227.13 points.

Meta rose 4.7%, reaching a new high since May 29. The big seven tech companies including Apple, Amazon, and Google rose 0.55%. The semiconductor ETF rose 2.48%, technology sector ETF rose 2.18%, and the global technology stock index ETF rose 2.06%. The consumer staples ETF fell 1.40%, and the energy sector ETF fell 1.40%.

WTI crude oil fell 2.4%, closing at $71.87 per barrel. Brent crude oil fell 2.6%, retreating to $76, adjusting from nearly $80 during the session. Spot gold rose 1.1%, closing at $4121.67 per ounce. Bitcoin rebounded to $63230, and Ethereum was priced at $1745.16. The 10-year U.S. Treasury yield fell by 3 basis points to 4.55%, while the 30-year hovered above the 5.00% mark. The dollar came under pressure and declined.

Macro and Forward Outlook

Iran's counterattack on U.S. military targets in Kuwait, Qatar, and Bahrain was perceived by the market as a conflict within controllable limits. Oil prices quickly reversed downwards, with Brent dropping from nearly $80 to $76. The market consensus is that both sides have no intention of further escalating and prefer to maintain leverage through negotiations.

The easing of inflation expectations directly transmitted to the U.S. Treasury market. The 10-year U.S. Treasury yield fell by 3 basis points, while the 30-year remained above the 5% mark; however, strong auction demand shows that long-term investors are beginning to reprice yields. The expectation for Federal Reserve interest rate hikes has some room for adjustment.

Micron announced plans to invest over $250 billion in new capacity in the U.S. by 2035, directly confirming the demand for AI chips. SK Hynix's U.S. stock market listing was oversubscribed more than 7 times, reflecting sustained demand for storage. These two major news items together push the entire chip industry chain upward.

The market focus has shifted to the upcoming earnings season. Analysts generally expect S&P 500 earnings per share to grow by 24% year-on-year in the second quarter, with technology companies contributing much of the increase. Currently, the expected price-to-earnings ratio for the S&P 500 is around 20 times, down from 21 times a month ago. However, simply exceeding expectations will not be enough to support further increases in stock prices; companies must demonstrate that margins remain high, guidance is robust, and that AI-driven earnings growth has sufficient breadth to support valuations.

Chip stocks are outperforming the tech giants, with Goldman Sachs claiming this is a "broadening diffusion" rather than a comprehensive rally, and structural differentiation shows that risk appetite recovery is still uneven. Beneficiary downstream companies from AI investments are even performing better than the investors themselves.

Tide Perspective

The geopolitical situation shifted from a tug-of-war yesterday to being regarded as "priced in" by the market today, an adjustment that took just one trading day. The market logic is straightforward: Iran's retaliation is aimed at maintaining leverage for negotiations, not genuinely pursuing a full-scale war. Once this expectation was established, the decline of oil prices from $78 to $76 was a natural result.

The rebound in chip stocks is underpinned by two overlapping signals: the easing of geopolitical risks cools inflation expectations, and news from Micron and SK Hynix directly proves that AI demand is still expanding. The resonance of these two signals has led to two consecutive days of strength in the Philadelphia Semiconductor Index.

The real test comes from the earnings season. The market has already priced in a 24% earnings growth, and the next question is whether companies can not only exceed expectations but also prove the sustainability of that growth. If earnings reports show no significant reduction in the scale of AI investments, chip stocks may have further upside; if data shows that companies are starting to tighten budgets, the current rebound may be an overly optimistic pricing reaction to Micron's substantial investment plan.

Next Monday will kick off the earnings season, marking a moment to evaluate market judgments.