Written by: Chao Xiang Research

The S&P 500 and Dow Jones both refreshed their historical closing records, with the Nasdaq rising 2.59%. The core driving force behind the market's upswing is the expectation of the reopening of the Strait of Hormuz. U.S. Treasury Secretary Besant and Secretary of State Rubio both hinted that negotiations could yield results as soon as tomorrow, leading oil prices to plummet over 5%. Chip and storage stocks emerged as another independent main trend, with the Philadelphia Semiconductor Index rising over 6%, supported by a bullish report from HSBC and Samsung's new technology roadmap, with little relation to developments in Iran. However, after the U.S. stock market closed, SpaceX and AMD both released their most closely watched earnings reports since going public in quick succession. While both sets of data exceeded expectations, stock prices turned downward, once again demonstrating that "good performance cannot withstand selling pressure."

Reopening expectations for Hormuz ignite optimism; oil prices plummet over 5%

The S&P 500 rose 1.79% to 7736.52 points, surpassing the closing all-time high set on June 2nd. The Dow Jones rose 1.71% to 54085.88 points, refreshing the historical closing high for two consecutive trading days. The Nasdaq rose 2.59% to 26584.993 points.

U.S. Treasury Secretary Besant announced that an agreement with Iran to reopen the Strait of Hormuz could be finalized as early as tomorrow, with Secretary of State Rubio also indicating that negotiations are progressing. The Iranian side also hinted on the same day, with the Foreign Ministry spokesperson stating that negotiations with Oman have shown positive technical and political progress. It is reported that Iran has abandoned its previous insistence on a "dual control" plan and is considering involving Western European countries like the UK and France in the demining process for the first time. This series of signals has significantly raised market expectations for de-escalation of the conflict, with WTI crude oil dropping 5.69% to $75.77 per barrel, and Brent crude dropping 5.26% to $79.36 per barrel. The yield on 10-year U.S. Treasury bonds fell by 5.08 basis points to 4.6248%, while the 2-year yield fell by 4.15 basis points to 4.1959%.

COMEX gold rose 1.07% to $4134.2 per ounce. COMEX silver rose 3.27% to $59.75 per ounce. Bitcoin opened at $63463.72, unchanged from Monday, rising to $63818.70 in early trading; Ethereum opened at $1858.53, down 1.3%, rising to $1874.41 in early trading. The Livermore Chinese concept stock index closed up 1.55%, and major European stock indices collectively rose, with the German DAX30 up 0.85%.

Chip and storage stocks soar; Philadelphia Semiconductor Index rises for four consecutive days

The Philadelphia Semiconductor Index rose over 6%, marking the fourth consecutive trading day of gains for the index, which had previously suffered a significant decline of 20.6% in July. Chip stocks strengthened collectively, with ARM rising 17.36%, Intel and SanDisk rising over 10%, and SK Hynix rising over 8%. The optical communications sector was also strong, with Coherent and Maxell Technology rising over 12%, Corning rising over 9%, Lumentum rising over 8%, and Micron Technology rising over 7%.

This rebound is backed by supportive research reports. HSBC calculated that Samsung Electronics' current stock price, relative to its long-term earnings assumptions, corresponds to only 0.8 times the earnings per share for 2024, indicating that the market's premium for AI storage concepts has essentially been wiped out, with SK Hynix in a similar situation. HSBC's conclusion is that the most severe panic selling wave has likely passed. On the same day, Samsung announced a new generation 3D memory technology roadmap, claiming that the new plan can achieve several times the storage density compared to traditional HBM, further reassuring the market.

SpaceX and AMD post-earnings reports exceed expectations, yet stock prices turn downward

SpaceX's first earnings report since going public was released, showing second-quarter revenue of $7.8 billion, a 92% year-on-year increase, significantly exceeding the market expectation of $6.81 billion. Adjusted EBITDA reached $3.5 billion, a 191% year-on-year surge, also far exceeding the expected $2 billion. The Starlink business accounted for most of the profits, and the losses from the AI business were nearly halved compared to expectations. Musk revealed on the conference call that Grok 4.6 is expected to be released next week, and SpaceX's computing power could reach 5 to 10 gigawatts by the end of next year, with attempts to recover Starship V3's first and second stage rockets this year.

Despite such impressive figures, SpaceX's stock price fell nearly 9% in after-hours trading, indicating that the market appears more concerned about the sustainability of the company's capital expenditures, with this performance report becoming a secondary issue.

AMD's situation was similar. The second-quarter revenue of $11.54 billion marked a 50% year-on-year increase, setting a new historical high and exceeding the market expectation of $11.31 billion. Adjusted earnings per share rose 246% year-on-year to $1.66, also surpassing expectations. Revenue from the data center business was $6.7 billion, a 107% year-on-year increase, accounting for 58% of total revenue. CEO Dr. Su emphasized on the conference call that the company is still in the early stages of the AI cycle and expects the data center sales scale to double by 2027.

However, the market's focus was on the third-quarter revenue guidance, which had a midpoint of $13 billion, although this was higher than the previous estimate of $12.5 billion, the increase was still deemed insufficient by some aggressive investors, and AMD also saw its stock price drop over 8% in after-hours trading.

Relaxation in the day, cold water in the evening; the market standards have changed

The easing of geopolitical tensions has pushed both oil prices and long-end interest rates down, while chip and storage stocks have restored a large portion of the declines seen in July due to bullish reports from institutions like HSBC; this is what happened during the day. However, after the market closed, SpaceX and AMD poured cold water on this optimistic sentiment with their after-hours earnings reports. Both companies had strong numbers, yet their stock prices fell. The market's judgment criteria for AI-related companies have changed; simply exceeding expectations is no longer sufficient. What is truly under scrutiny is whether the magnitude of outperformance is substantial enough and whether capital expenditure calculations are reasonable.

How long this divergence will last has two specific observation points in the coming days. First, whether the Strait of Hormuz can indeed finalize an agreement tomorrow as stated by Besant; if negotiations face reversals, the oil prices and risk premiums that have been suppressed today could rebound at any time. Second, the non-farm payroll data to be released on Friday; this is the key reference for the Federal Reserve’s judgment on interest rate paths. If the data shows that the employment market remains robust, then the space freed up by today’s decline in U.S. Treasury yields may be tightened again.