05/04 U.S. stocks fall on risk of Strait of Hormuz, oil prices, long-term interest rates rise together

05/04 U.S. stocks fall on risk of Strait of Hormuz, oil prices, long-term interest rates rise together

The U.S. stock market started steady, paying attention to the performance season, although there was a high level of anxiety surrounding the Strait of Hormuz. However, the decline expanded after the missile attack on the UAE and the fire at the crude oil facility were reported. Following the related news, the rebound and decline proceeded. On the related news, international oil prices rose sharply, and the interest rate on government bonds exceeded 5.0%, raising anxiety in the financial market, with the 30-year government bond rate exceeding 5.0%, leading to a continued decline in major indexes. However, the firmness of Nasdaq continues (Dow -1.13%; Nasdaq -0.19%; S&P 500 -0.41%, Russell 2000 -0.60%; Philadelphia Semiconductor Index -0.57%)

*Variables: U.S.-Iran, prices, and interest rates

International oil prices exceeded $105 in WTI standards as the UAE announced a missile attack from Iran that a fire broke out at its crude oil facility and further attacks were underway. In the meantime, the Iranian media reportedly attacked the U.S. warship, but the U.S. Central Command claimed that there was no attack from Iran and announced that a safe passageway for the Strait of Hormuz had been developed. As uncertainties surrounding the Strait of Hormuz have risen, international oil prices and government bond rates have exceeded 5.0% on a 30-year basis

The recent sharp rise in international oil prices has led to U.S. gasoline prices exceeding $4.46 a gallon, which has increased inflationary pressure on the market. According to CME FedWatch, the probability of a rate hike in December was 24.6% from 9.3%, and the probability of a rate hike in March 2027 was 24.8% to 55.3%. Eventually, the market is expected to shift this year’s rate freeze to a rate hike in March 2027 due to increased inflationary pressure.

Fed members’ hawkish comments also affect financial markets. Fed Vice Chairman Michael Barr warns of psychological contagion that risks in the private equity market could spread to the entire financial system. Chicago Fed Governor Goolsbee argues that rate cuts should be prudent based on recent inflation indicators. Minneapolis Governor Kashkari warns that prolonged Middle East war will increase inflation risks. New York Fed President Williams also argues that higher prices could remain in place for several quarters due to higher tariffs and energy prices.

In the end, the uncertainty surrounding the Strait of Hormuz, the resulting surge in energy prices and inflationary pressure, and concerns over the market’s shift to an interest rate hike on the Fed are raising uncertainties in the stock market. However, the firmness of companies’ performance is only increasing short-term volatility rather than increasing the decline, and there is a high tendency for backlash buying to flow into individual stocks. Still, the market tends to focus on performance rather than Iranian issues.

*Featured Stocks: Micron, SanDisk Up Vs. Construction, Finance And More Slump

Semiconductors: Mixed patterns of profit-taking sales and repulsive buying
Nvidia (+0.02%) fell due to the influx of uncertainties surrounding the Strait of Hormuz, but it also showed strength by shifting upward due to the influx of backlash buying. Broadcom (-1.13%) fell after the U.S. government was looking for Google as an alternative for fear of restricting services in the event of a national crisis, but Google’s TPU lacked the highest-grade security certification to be used on the government network. AMD (-5.27%) fell after HSBC downgraded its investment opinion to hold from buy, saying a lack of production capacity could limit its growth potential. Intel (-3.85%) fell due to the recent rise in profit-taking due to the Iranian issue. Qualcomm (-4.88%) surged after its recent earnings report, but fell today due to the opening of its sales.

Semiconductor Storage: Supply and Demand Continues
Micron (+6.31%) has been on the rise due to lack of supply and demand for HBM and DRAM, sharp rise in average selling price, and strong performance. As related companies rose sharply in the Asian market today, the company also recorded a strong performance. Other storage companies such as San Disk (+5.80%), Western Digital (+2.51%) and Seagate (+1.60%) are also on the rise due to lack of supply. Global foundry (+4.38%) is up after Kenter Fitzgerald upgraded investment. Philadelphia Semiconductor Index fell 0.57%

Cars: Ford Slips On News Of Surging Sales
Tesla (+0.43%) Rises As Model X Says It’s Fastest-Selling Used Car In U.S. Here’s LIDAR Oster (+6.43 percent) released new products, reflecting the growth expectations of the autonomous driving industry. However, the rise is limited as the U.S.-Iran issue is fueling anxiety. Ford (-3.20 percent) fell in April after news of a 14.4 percent year-on-year drop in auto sales. GM (-0.09 percent) remained solid due to fluctuations in the steady stream despite the possibility of shrinking consumption due to rising international oil prices and soaring interest rates. Secondary battery companies such as QuantumScape (-0.96 percent) fluctuated in the steady stream, and lithium-related companies such as Albemarle (-1.65 percent) fell due to soaring interest rates due to the U.S.-Iran issue.

Big Tech Stocks: Amazon Rises On Supply Chain Services Announcement.
Amazon (+1.41 percent) rose after news of its satellite communications cooperation with Apple and announcing that it will start Amazon Supply Chain Services, its own freight transportation business. The move is believed to be due to highlighted expectations for lower logistics costs. On the news, logistics companies such as UPS (-10.47 percent), FedEx (-9.11 percent), GXO Logistics (-17.70 percent), and CH Robins Worldwide (-9.06 percent) fell sharply. Meta (+0.27 percent) recently fell behind and rebounded on the inflow of backlash buying.

Alphabet (-0.93 percent) also declined due to the news that the U.S. government lacked the highest security certification for Google’s TPU to be used on the government network, and Freedom Brokerage raised its target price to $400 but lowered its investment opinion to neutral due to the recent rise. MS (-0.20 percent) rose due to the strong performance of software companies, but it still fluctuated due to the burden of capital investment. Apple (-1.18 percent) and Amazon (-1.18 percent)