05/06 U.S. stocks rise on U.S.-Iran’s previously expected corporate earnings report

The U.S. stock market started higher mainly in semiconductors after AMD (+18.61%) surged after its earnings announcement. In the meantime, as the possibility of an end to the U.S.-Iran war was highlighted based on U.S. President Trump’s remarks and Iran’s Foreign Ministry’s remarks, international oil prices and government bond rates fell sharply. Since then, the index has continued to rise amid solid investor sentiment, with major theme stocks showing a surge. In particular, Nvidia (+5.77%) showed a clear strong performance in options trading, and other large technology stocks also saw a significant increase in call option trading, leading to a strong supply and demand impact (Dow +1.24%; Nasdaq +2.02%; S&P 500 +1.46%; Russell 2000 +1.47%; Philadelphia Semiconductor Index +4.48%)

*Factors to Change: Former U.S.-Iran Expectations, Employment Indicators

U.S. President Trump claims that the war with Iran is very likely to end and that the agreement can be reached before his visit to China next week. Among Iran, the Iranian Foreign Ministry also announced that it is considering a memorandum of understanding proposed by the U.S. government. The memorandum of understanding is composed of 14 articles that include the suspension of Iran’s nuclear enrichment, the lifting of U.S. sanctions against Iran and the transfer of frozen funds, and the lifting of restrictions on the Strait of Hormuz. After the news spread, international oil prices fell by more than 7 percent to 95 U.S. dollars in terms of the WTI standard, and government bond rates also fell by around 8 basis points. As a result, the stock market also rose.

Of course, Israel will continue to strike Beirut, Lebanon, and Netanyahu will continue to attack, stating that he will catch all enemies. On top of that, uncertainty remains, with the chairman of the Iranian parliament also claiming that the U.S. is using economic and media pressure to foment division within Iran. Nevertheless, concerns over shrinking U.S. real consumption are being highlighted as U.S. gasoline prices have reached a four-year high, exceeding $4.5 a gallon, and Iran is also likely to agree on the economic impact of the U.S. blockade of the Strait of Hormuz.

Meanwhile, the ADP said in its private employment report that employment in the private sector rose to 1.09 million, up from 620,000 in March. However, it fell short of the 120,000 cases expected by the market. By industry, employment increased by 10,000 in construction, 250,000 in trade and transportation services, and 61,000 in education and healthcare, which does not have a significant economic impact. The wages of turnover workers remained at 6.6%, but the wages of incumbent workers were lowered by 0.1%p to 4.4%, the lowest since 2021. In the end, the job market is solid in numbers, but not solid. In today’s market, expectations from the end of the U.S.-Iran war and corporate performance are more important than these economic indicators, limiting the impact

*Featured Stocks: Key Theme Stocks, Semiconductor Bullish, ARM Surge After Hours

Semiconductors: Nvidia Rising Expectations On Surge In Options Trading
Nvidia (+5.77%) rose on the back of AMD’s solid performance and the announcement of its investment plan in optical communication company Corning. In particular, the market analyzed that Nvidia’s Corning investment and AMD’s strong performance suggest continued growth in AI-related supply chains. In addition, the supply and demand part is affected, with call options increasing significantly in the $200-225 maturity range on the 29th and options trading increasing in the $200-210 maturity range on the 15th ahead of the earnings announcement on May 20 in the options market. In fact, the volume of call options surged 50% compared to the average. The Philadelphia Semiconductor Index rose 4.48%, with the Philadelphia Semiconductor Index rising 4.48%

Semiconductor CPU: AMD Surges On Rising Demand In AI CPU Industry
AMD (+18.61%) surged after the company announced earnings and future outlook. On top of that, Goldman Sachs, Citibank, and KeyBank raised AMD’s target price on the back of increased demand for AI CPUs. Broadcom (-0.45 percent) started higher, but turned lower as some parts bottlenecks raised the possibility of slowing growth. Intel (+4.49%) rose as investment sentiment improved due to AMD’s good performance and a hike in its long-term forecast for the server CPU market. Qualcomm (+3.23 percent) also rose, reflecting expectations for related chip markets. ARM (+13.63%) also rose as it is a major player in the AI server CPU market. After the market closed, ARM rose by 11% after-hours on better-than-expected earnings reports, driving chip companies’ rise after-hours

Semiconductor Storage: Micron Rises On AMD Impact Vs. SanDisk Fluctuates On Moulin Anxiety
Micron (+4.12%) rose as the prospect of AMD’s more powerful long-term AI server CPU highlighted the expectations of semiconductor manufacturers to continue demand for AI infrastructure. However, it is characterized by the process of digesting the sale, such as the participation of profitable sales during the day and the conversion to a downward trend. Other storage companies such as Western Digital (+3.85%) and Seagate (+2.00%) continue to be strong. On the other hand, SanDisk (+0.26%) was digested after Western Digital announced that its stock would be sold 1.87 million shares and 650,000 shares of SanDisk through exchange. In particular, Western Digital plans to dispose of all of its shares in SanDisk, which is affected by the burden on the volume

Semiconductor Parts, AI Servers: Arista Networks Plunges Vs. SuperMicrocomputer Soars
Semiconductor equipment companies such as Ram Research (+7.75 percent) and AMAT (+4.33 percent) mostly rose due to AMD’s strong AI data center performance. TSMC (+6.36 percent) also rose sharply on the back of increased buying on AMD’s performance that proved its investment in AI infrastructure. Arista Networks (-13.61%) fell despite better-than-expected earnings and guidance. Goldman Sachs and others assessed that supply constraints weighed on the capacity to rise and the total margin ratio. Cisco Systems (-2.82%) also fell in the wake of supply instability. Super microcomputer (+24.54%) surged on better-than-expected performance and assessment that demand for AI servers is strongly flowing in. On related news, Dell (+10.39%) also saw a significant increase in server-related companies differentiate themselves

Optical Communications: Corning Surges On Nvidia’s Investment
Corning (+12.01%) has signed a $500 million AI infrastructure agreement with Nvidia, shares and