05/18 U.S. stocks fall after falling mainly on semiconductor stocks, as Trump mentions Iran

The U.S. stock market started higher as international oil prices rose due to the U.S.-Iran instability, but government bond rates fluctuated and stabilized. However, the concern over AI supply chain bottlenecks was highlighted by Seagate (-6.87 percent) CEO’s remarks at the JPMorgan Technology Conference, which led to a shift to semiconductor stocks. The decline continued as new momentum was limited, contrary to expectations, in the remarks of Nvidia (-1.33 percent) Jensen Huang at the Dell conference. In addition, the rising trend of international oil prices and government bond rates ahead of the market close also weighed on the burden. However, just before the market closed, when Trump said he would not attack Iran tomorrow, the Dow sharply declined and turned upward (Dow +0.32 percent, Nasdaq -0.51 percent, S&P 500 -0.07 percent, Russell 2000 -0.65 percent, Philadelphia Semiconductor Index -2.47%)

*Variants: Semiconductor peak-out jitters, Treasury yields rise

There were announcements from many companies at the JPMorgan conference, and CEO Seagate (-6.87%) expressed a cautious stance on new expansion plans, even though the manufacturing lead time for core components has been extended to more than nine months. This is a disappointment to the market, which expected short-term sales growth through aggressive capital spending expansion in line with soaring demand for AI data centers. In cycle industries such as semiconductors, such supply delays are seen as a favorable factor for rising product prices, but they are also interpreted as risks of growth constraints. In particular, the market interprets this as a possibility of a semiconductor cycle peak-out rather than a simple price increase, given that prolonged supply bottlenecks could lead to delays in orders and increase the possibility of inventory adjustment by customers.

As a result, it is unable to absorb the overflowing forward demand due to the limitations of the manufacturing industry, highlighting the risk of supply chain instability across the AI value chain, and encouraging stock prices to fall. In addition, concerns about the speed of monetization of final AI service companies such as OpenAI are also raised, which stimulates the possibility of slowing capital spending by large technology stocks in the future. Seagate’s announcement further expands such concerns amid fundamental anxiety that short-term high-growth premiums of AI networking stocks, which were highly valued in expectations of aggressive capital spending, could be undermined. As a result, most AI companies, including semiconductors, have fallen

Meanwhile, interest rates on government bonds continue to rise. Recently, interest rates on government bonds have risen as inflationary pressures have increased due to soaring international oil prices. In particular, CME FedWatch has increased anxiety over the Fed’s policy, with the possibility of a rate hike in December this year reflected to the 50% level. In addition, the surge in interest rates on UK government bonds since the U.K. local elections has been a burden on the U.S. bond market, and supply and demand factors such as the increase in the issuance of corporate bonds by hyperscalers have also stimulated the pressure to raise interest rates.

In the meantime, interest rates temporarily stabilized as international oil prices showed changes, including a drop in the market, and analysts said that the recent rise in interest rates reflected concerns over excessive tightening in the market. In addition, the sharp drop in interest rates on U.K. government bonds was also attributed to Manchester Mayor Andy Burnham’s emphasis on maintaining fiscal rules and fiscal soundness. However, concerns over the U.S.-Iran conflict have resurfaced, leading to a rise in international oil prices and a continued rise in interest rates on government bonds. However, as Trump said just before the market closed that he would not attack Iran tomorrow, the interest rates continued to change, with interest rates shifting downward.

*Featured Stocks: Micron, Nvidia, Tesla Down

Semiconductors: Nvidia Falls On Seagate Announcement Ahead Of Earnings Release
Nvidia (-1.33%) fell on Friday after U.S. President Trump said Chinese companies did not buy Nvidia’s H200 GPUs under the government’s watch. Today, it started higher ahead of the earnings announcement in early trading, but continued to fall. Despite Jensen Huang’s remarks at the Dell conference during the day, the decline continued amid disappointment that there was nothing to stimulate new momentum. In addition, Seagate’s remarks stimulated supply chain instability and semiconductor peak-out concerns, which also contributed to the decline. In addition, continued rising interest rates on government bonds are also burdensome. However, due to Trump’s remarks and the effect of options expiring, the fall is reduced

Cerebras (+6.05%) has increased volatility in supply and demand factors such as rebounding today after a sharp drop on the first day of new listing and a sharp drop on the next day. Broadcom (-1.05 percent) fell on the back of sluggish semiconductor companies. AMD (-0.73 percent) fell after Citi raised its target price on the basis of optimistic outlook on server CPU market size and data center outlook. In addition, Jensen Huang’s positive comments on the CPU industry continued to decline. Intel (-0.55%) was also sluggish. However, most semiconductor companies saw their fall shrink due to Trump’s remarks before the market closed and the effect of option expiration. The Philadelphia Semiconductor Index also fell more than 4%, but fell 2.47%, shrinking its fall

Semiconductor storage: Seagate announcement highlights industry peak-out concerns, falls
Micron (-5.95%) fell as CEO Seagate (-6.87%)’s remarks highlighted concerns over a peak out of business. Western Digital (-4.84%) and SanDisk (-5.30%) also fell. At the JPMorgan conference, CEO Seagate announced that he would not expand new plants but improve existing ones to increase supply. As a result, market participants expected a significant increase in short-term sales through surging demand for AI data centers, but these remarks led to an issue of upper sales and disappointed sales. On top of that, concerns over peak out, where demand peaks and inventory builds up, are highlighted if the lead time is prolonged

Semiconductor Equipment, Parts: Slump On Seagate Announcement And AMAT’s Downgrade On Investment Opinion
AMAT (-5.28%) falls after Morgan Stanley downgraded its investment opinion to neutral from overweight, saying its 2027 growth outlook is in line with expectations across the wafer manufacturing equipment market. Semiconductor equipment parts makers such as Ram Research (-2.37 percent), KLA (-2.53 percent), Terradine (-4.98 percent), and ASML (-1.96 percent) are also sluggish as they announced that they will not expand Seagate’s plants. TSMC (-2.08 percent) is also sluggish

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